Free telecom services from Reliance Jio and the resulting price war in the industry have hit government revenue.
While revenue from licence fees has dipped from ₹3,583 crore in the second quarter to ₹3,165 crore in the third, money collected in the form of spectrum usage charges has fallen from ₹1,820 crore to ₹1,553 crore.
The decline has happened for two reasons. First, RJio itself is paying very little as it is not generating much revenue from the free services it offered users from September. Reliance Jio has 136 per cent more subscribers than Tata Teleservices but the licence fee deposited by RJio is only 3.5 per cent of what the Tata company paid in the third quarter.
Second, incumbent operators have had to lower their tariffs to stay in competition. This has impacted their revenue. Telecom operators pay a percentage of their revenue as licence fee and spectrum usage charge, so any impact on revenue also impacts the government’s income.
Worried by this trend, the Telecom Commission, the apex decision making body of the Communication Ministry, has asked telecom regulator TRAI to look into the promotional tariffs being offered by RJio.
DoT officials told BusinessLine that the worry is that if the trend continued then it may impact the investment and repayment capacity of the industry. In such a situation, the possibility of a default on loans and instalments for acquisition of spectrum in earlier auctions cannot be ruled out, an official said, adding that the telecom regulator should implement its rules on promotional offers in “letter and spirit”.
TRAI had earlier given a clean chit to RJio’s promotional offer.