The telecom sector is one of the largest revenue-generating segments of the economy. But for reasons best known to the authority, the top official post of the Telecom Department has been vacant even as revenue from telecom services is expected to decelerate significantly in FY18. Indeed, the Department has asked the Finance Ministry to revise downward the non-tax revenue targets for the sector by about 40 percent.
The FY 18 Budget has set a target of Rs 47,304 crore for the telecom department. However, the DoT wants this to be revised down to Rs29,524 crore.
Anuradha Mitra, Member (Finance), Telecom Commission, in a letter to the Secretary of Economic Affairs, said, “In view of the severe financial stress in the telecom sector and the rapidly declining revenues of all the major telecom service providers, the revenue targets for DoT for BE 2017-18 will actually require downward revision.”
“While the DoT has made reference to TRAI seeking their recommendations for the next round of spectrum auction, the present financial stress in the sector is cause for concern…placing a question mark on the ability of telecom service providers to fund further spectrum purchases. In the circumstances, spectrum auction proceeds for 2017-18 are being taken as nil,” the letter added.
According to DoT estimates, the license fee collections, which were projected at Rs16,664 crore, are likely to fall to Rs9,255 crore in FY 2017-18. The spectrum usage charge for this year is also expected to be lower at Rs4,970 crore. Telecom operators pay a licence fee and spectrum charge as a percentage of their revenues earned.
Over the past six months, all the incumbent operators have reported huge declines in revenues after the launch of free services by Reliance Jio.
Telecom operators recently met an inter-ministerial panel seeking relaxation in the licence fee and overall levies on the sector.