NEW DELHI: The upcoming Budget should focus on bringing down the current GST rate and a host of indirect taxes, said Rajan Mathews, director general of telecom lobby group Cellular Operators Association of India (COAI).
The government, he said, should reduce the license fees and reduce reserve prices for 5G spectrum set by regulator TRAI when it goes for auction later this year. “Last year, the sector hasn’t got anything. They have been seen as the sector to extract money. We’re hoping this year the government reviews the financial situation of the industry and push for a revival,” Mathew said.
He added that given the huge burden of taxes and regulatory levies on the operators and considering the fragile state of their finances, special benefit should be provided by way of exemption on reverse charge for regulatory payments of License Fees, Spectrum Usage Charges and the spectrum auction.
Union telecom minister Ravi Shankar Prasad, too, has acknowledged the financial burden of the sector and has pitched for a series of relief measures, including lower licence fee in the Budget. He has also sought a cut in GST rate from 18 per cent to 12 per cent. Mathew said that for every one rupee of earning, 30 paise goes to the government in the form of taxes, which is very high. While average revenue per user (ARPU) for major telcos has improved in recent quarters, the sector's debt and competition among telcos is still too high to improve financials, he added.
On the crucial 5G spectrum auction, Mathew noted that it is very important to set the prices the spectrum right and offer enough spectrum to make it financially viable for telcos. Trai has mandated that an operator would need to pay at least `9,840 crore to buy 5G spectrum on a pan-India basis. It had said that the 3,300-3,600 MHz band, expected to be the primary band for 5G services, should be auctioned as a single band and in blocks of 20 megahertz.
Commenting on the loss-making telecom operator BSNL, Mathews said that making it a public-private venture would eliminate much of the woes of the state-run operator. “Government feels both BSNL and MTNL should exist and has its own reason for it, primarily being the safety concern. It also feels that a public enterprise should be there to balance the market dynamics.” Referring to Videsh Sanchar Niger Ltd, which got acquired by Tata Communications, Mathews said the government can do a similar exercise. “By giving it to professionals, cutting down its manpower BSNL can become a viable business venture,” he pointed out.