Telecom body COAI bats for cut in licence fee; says telcos face double whammy

New Delhi: Telecom industry body COAI on Thursday sought abolition or reduction of AGR-related fees for telcos at the earliest and pitched for lowering licence fee to 0.5-1 per cent of gross revenues.

COAI argued that with the separation of spectrum from the license and its assignment at market price, the justification for imposing licence fee had ceased to exist long back.

The license fee should "at best" cover the cost of administration of the license only, which is around 0.5 per cent to 1 per cent of the gross revenues, instead of the 8 per cent paid currently.

COAI, whose members include Reliance Jio, Bharti Airtel and Vodafone Idea, said payments charged on the basis of the AGR (Adjusted Gross Revenue) from telcos, ends up being a "double whammy" for players, who, as it is, incur huge investments towards procuring the spectrum.

"It is evident that Telecom Service Providers (TSPs) buy the Spectrum for utilisation through transparent auction processes, paying a substantial amount for receiving the right to use the same. At the same time though, payments are also charged on the basis of the AGR on the TSPs, which is a double whammy for them, given the huge investments made towards procuring the spectrum," COAI said.

Citing an example, it contended that a consumer who buys a property does not pay any tenancy fee to stay in it.

"However, in telecom, the TSPs buy the spectrum at huge prices, and thereafter, also make substantial AGR-related payments for the same. This would amount to buying a house and paying the tenant's rent for the same as well!" COAI director general SP Kochhar said.

COAI said licence fee was appropriate when licenses were bundled with the spectrum at the time of introduction of the National Telecom Policy (NTP) of 1994, however, thereafter, spectrum was delinked from the license in 2012 and is currently assigned using a transparent and open auction procedure.

It is a well-established fact that growth of the telecom sector has a multiplier effect on the economy, by not only contributing to GDP growth but also increasing productivity and improving the standard of life of the common people, the association contended.

It is pertinent to note here that telecom companies in India, in addition to paying the Telecom Specific AGR related amount, also pay CSR, GST and Corporate Tax, just like any other company in the country.

"This puts companies engaged in the telecom business at a significant disadvantage vis-à-vis other businesses, severely limiting their surplus for investment in regular technological upgrades," COAI said.

Abolition or reduction of the licence fee related payments would facilitate the operators to plough the revenues back to the network for its continuous upgradation and expansion, to be able to provide state-of-art services to the people of this country.

Moreover, it would further enable faster digital inclusion, especially in the remote areas.

"With the overarching promise of 5G and beyond, to connect and empower several other industries and provide a sizeable push to India's Digital Economy towards a 'Viksit Bharat', we urge the government to consider our request on abolition/reduction of the AGR related fees at the earliest, as specified above," Kochhar said.