Indian telecom operators team up to reform the market

In a rare show of unity, India’s telecommunications operators are pushing the government for a major sector reform program that would ease taxes, spectrum payments and other charges.

The move, as reported in the Indian press, comes as Vodafone Idea struggles to stay afloat, weighed down by the burden of its dues. The latest twist in history Thursday saw the phone company defend itself against accusations it failed to pay the government in full for its first quarter telecommunications license.

“VIL has paid its license fees for the first quarter of 2021-2022,” the operator said in a statement to Press Trust of India (PTI), following a report in the India time that he had missed nearly 1.5 billion rupees (US $ 20 million).

But although its financial situation is significantly more precarious than that of its main rivals, Vodafone Idea is clearly not alone in feeling aggrieved by Indian bureaucracy and state burdens.

Via the Cellular Operator Association of India (COAI), the country’s telecom operators are calling for change, it emerged this week.

The Economic times was one of several Indian media outlets that saw a letter sent by COAI to the government – the Ministry of Telecommunications (DoT), the Ministry of Finance and the Cabinet Secretary, to be precise – supporting what the newspaper called a huge stimulus package for the telecommunications industry.

The association wants a reduction in the myriad of royalties that telecommunications operators pay to the state, as well as changes to the spectrum rental conditions and the general conditions governing the effective payment of legal contributions.

“[The] India’s telecommunications sector remains one of the most heavily taxed sectors. The government must recognize that the current revenue sharing regime of around 32% of revenue in the form of taxes and levies is unsustainable and will always be detrimental to the growth of the industry due to the continued lack of liquidity. surplus to be reinvested, ”a segment of the letter, signed by SP Kochhar, CEO of IBOC and dated August 17, reads as follows.

Based on Economic times’ report, the spectrum seems to be at the center of the demands of the operators. Among other things, they are asking the state to double the term of all spectrum licenses to 40 years from the current 20 at no additional cost, and to allow telecom operators up to 10 years to pay for allocated spectrum. .

They also called for the annual license fee to be reduced to 2% of operators’ adjusted gross revenues, from 8% currently, and are calling for a sharp reduction in spectrum usage fees (SUC), the newspaper said.

These are just the key points of IBOC’s demands; there are many others.

It seems unlikely that the government will simply accept these demands, especially given how heavily it relies on the telecommunications sector for its revenue, but they should at least serve as the basis for some negotiations. More than that, the letter demonstrates that while Vodafone Idea is currently making headlines, all the big players are feeling the pinch in India.

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