A telecom tower stands of the city skyline at dusk. (Photographer: Waldo Swiegers/Bloomberg)

Budget 2019: Government Raises Revenue Expectation From Telecom To Rs 50,519 Crore In FY20

The government on Friday increased revenue expectation from the telecom sector, which is reeling under financial stress, to Rs 50,519 crore in 2019-20 without accounting for spectrum auction payment. The budget document presented in Parliament showed provision of Rs 50,519.81 crore as non-tax revenue from the communication sector for 2019-20 which was kept at Rs 41,519 crore in the interim budget in February.

"They (Department of Telecommunications) are still working on it (spectrum auction) so we have not taken it into account in the budget," Department of Economic Affairs Secretary SC Garg told reporters. The fresh estimates are nearly 29 percent higher compared to Rs 39,245 crore achieved in the previous fiscal. Receipts from the telecom sector mainly relate to the licence fees from operators and spectrum usage charges.

"Spectrum-related payments are estimated to be around Rs 28,000 crore which includes approximately Rs 11,000-12,000 crore from licence fee and spectrum usage charge. Around Rs 21,000 crore is estimated from repayment of debt (pending spectrum auction payments)," industry body Cellular Operators Association of India’s Director General Rajan S Mathews said. “I am not sure from where rest of the payments will come if auction proceeds are not included in it.”

The collection from the sector in the previous financial year fell short of Rs 9,416.42 crore at Rs 39,245 crore from the budgeted provision of Rs 48,661.42 crore. The telecom sector is reeling under debt of around Rs 7.8 lakh crore and at the same time, margin earned by incumbent operators have been under pressure since the last three years due to ongoing tariff war.

When asked if there is any indication of reduction in licence fee, Mathews said the new estimates do not reflect any sign of lowering these charges. The government is planning to go for spectrum auction this year that also involves sale of frequencies for 5G services. Telecom Regulatory Authority of India has recommended auction of about 8,644 MHz of telecom frequencies at an estimated total base price of Rs 4.9 lakh crore. The Department of Telecommunications has recently decided to refer the recommendations back to the Telecom Regulatory Authority of India for review.

Also read: Budget 2019: Finance Minister Introduces Two New Super-Rich Tax Categories

Bloomberg Quint

Add BloombergQuint App to Home screen.