Why Are Telcos Disappointed With Budget 2018

by Moumita Deb Choudhury    Feb 02, 2018


With all the disruptions and distortions in the telecom sector, it was obvious that the sector players were waiting with bated breath for the budget to provide them some respite. Finance Minister Arun Jaitley’s budget 2018-19, however, unfolded utter disappointment for them.

The budget has stamped a 58 percent increase in revenue at Rs 48,661.42 crore from the strained telecom sector in 2018-19 against the revised revenue estimate of Rs. 30,736.47 crore from the current fiscal.

Telecom Operators Body COAI indicated discontent at the Budget for not granting the industry’s key demands including cut in levies and taxes. It said, expressing discontent that the already stressed sector “continues to remain an orphan.”

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“The telecom industry is disappointed that none of its key asks have found mention in finance minister Arun Jaitley’s budget. We had sought a reduction in the high levies and taxes, and an urgent intervention for resuscitating the sector, which is currently experiencing its worst financial health and hyper-competition,” said, Rajan Mathews, director general of Cellular Operators Association of India (COAI).

The Rs. 44, 342.2 crore revenue from the sector will be obtained through license fee and spectrum usage charges from the operators.

Last year there were no auctions and for 2018-19 it will depend on Telecom Regulatory Authority recommendations. The Department of Telecom is seeking views from TRAI on spectrum pricing and timing of the auction.

Matthews said an urgent intervention is imperative for saving the sector, which at present is witnessing its worst financial struggle and extreme competition.

“The FM emphasized the importance of moving to a digital economy, but the actual digital highway, which is telecom has found no mention in terms of substantive support, unlike road, railway, highways, electricity, which have received substantial mention,” said the COAI director general. 

It would have been beneficial for the telecom industry if the Budget had provisions for cuts in key telecom levies such as spectrum usage charges (SUC), license fee and Universal Service Obligation Fund (USOF) fees, said Matthews.

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“We reiterate our four key asks, reduction extremely high and unsustainable levies and taxes, reduction in BCD on 4G LTE Equipment, clarity on right of way related taxation at the state level, and clarification on lowering the tax rate to one percent on discounts extended to small dealers,” he emphasized.

However, Aruna Sundararajan, Secretary, Telecom, said the DoT has started working on National Telecom Policy 2018 and its mention was thus not necessary in the Budget.

“This was Budget…we are having a separate Telecom policy to see some of the other issues. The Budget was on expected lines (for us),” HBL quoted Sundararajan as saying.

Sundararajan was hinting towards the proposal that the FM has announced for the BharatNet project. A Rs. 10,000 crore has been sanctioned for this in 2018-19. Arun Jaitley has allotted Rs. 10,000 crore in the last budget, of which Rs.7,000 has been used till now, she pointed out.

The government plans to set-up five lakh Wi-Fi hotspots that will offer broadband access to five-crore rural citizens as part of this investment.

The DoT has activated 32,000 Wi-Fi hotspots in some areas of the country over the past one year.

D.D. Mishra, Research Director at Gartner, however, said, “The budget does not generate excitement to the extent that was anticipated. Though the extension of rural WiFi hotspots along with investments in telecom can enable rural economy and drive much better financial inclusion and drive technology-enabled growth for the subset of our rural population, we need a better connect between strategy and execution especially in terms of digital India so that we are able to fully leverage the enhanced allocation.