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Telcos made Rs 10,000 crore extra capex to support large apps: COAI

"The additional capex required to provide the infrastructure to carry the LTG-related data traffic for the year 2023 alone amounts to around Rs 10,000 crore

Telecom tower

Kochhar said the enhanced data traffic due to LTGs (large traffic generators) does contribute to the revenue of telecom operators but is grossly inadequate to cover the increase in infrastructure capex

Press Trust of India New Delhi

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Telecom operators are estimated to have spent an additional Rs 10,000 crore in 2022-23 to support traffic generated by large entertainment and communication apps, according to an estimate of telecom industry body COAI.

Cellular Operators Association of India, Director General, SP Kochhar told PTI that the infrastructure support provided by telecom operators to top 4-5 apps large traffic generator apps also corresponds to their revenue growth and in the absence of fair share norms for large apps, the government has lost about Rs 800 crore revenue in 2023 alone.

He said that the industry body has submitted a white paper to the Ministry of Finance in this regard in January.

 

"The additional capex required to provide the infrastructure to carry the LTG-related data traffic for the year 2023 alone amounts to around Rs 10,000 crore.

Accordingly, the proposed fair share to TSPs on the amount would have resulted in enhancing AGR-related licence fees and USOF levies (combined 8 per cent of AGR or part of revenue on which government computes its share) to almost Rs 800 crores for the government, which is presently not being received," Kochhar said.

Telecom operators across the world have been demanding contributions from large traffic generator apps mainly Netflix, WhatsApp, Instagram, X etc to support the cost of network infrastructure.

According to COAI's financial analysis, the industry capex, which was Rs 46,532 crores in March 2021, increased to Rs 53,661 crores in March 2022, to accommodate the then traffic from telecom operators.

However, from 2022 onwards the infrastructure spends saw a steeper growth in the capex figures, going up to Rs 73,922 crores in March 2023.

Kochhar said the enhanced data traffic due to LTGs (large traffic generators) does contribute to the revenue of telecom operators but is grossly inadequate to cover the increase in infrastructure capex.

"Going by the current consolidated subscriber base of 114.4 crores, this additional subscriber base of 50 crores is unachievable. This leads to a conclusion that given the current trends, the infrastructure spends will continue to surpass the earnings of the TSPs over the years, since TSP ARPUs take into account revenue collections due to voice, data and SMS for the entire subscriber base," he said.

India crossed the 100 crore subscriber mark in mid-2015 and in last 8.5 years it has added only around 19 crore connections.

"The broadening funnel between baseline TSP traffic and the combined data traffic from TSPs, LTGs and others, which continues to increase, indicates that even higher quality infrastructure would be required to be provided going ahead. The additional infrastructure cost to carry this aggregated data, being due to LTG traffic, needs to be contributed by LTGs," Kochhar said.

A bill sponsored by US Senators Markwayne Mullin, Mark Kelly and Mike Crapo in US Congress, aimed at lowering broadband costs for consumers, has also proposed a direction to telecom regulator Federal Communications Commission (FCC) to mandate social media platforms, streaming services apps, cloud computing service providers like WhatsApp, YouTube, Netflix, Google etc to contribute to universal fund that is used for building networks.

Kochhar said that COAI continues to stick to its principles to not burden the end-users with increased tariff to offset the infrastructure costs, as well as to protect the interests of the Startups, MSMEs and smaller players with low traffic generation to encourage innovation and foster entrepreneurship.

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First Published: Feb 28 2024 | 7:47 PM IST

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