With revenues from telecom services dipping drastically and with little prospects of holding the next round of spectrum auction this year, the Department of Telecom has asked the Finance Ministry to revise downward the non-tax revenue targets for the sector by nearly 40 per cent.
According to the Budget Estimates for 2017-18, the Finance Ministry has set a target of ₹47,304 crore for the telecom department. The DoT wants this revised down to ₹29,524 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 licence fee collections, which were projected at ₹16,664 crore, are likely to fall to ₹9,255 crore in FY 2017-18. The spectrum usage charge for this year is also expected to be lower at ₹4,970 crore. Telecom operators pay 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.
Mitra said the trend of falling revenues will continue for some time, primarily due to the massive price cuts by telecom operators due to heightened competition.
Telecom operators recently met an inter-ministerial panel seeking relaxation in the licence fee and overall levies on the sector.