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Ministry to loose Rs 50 billion in telecom licence fees

The delay in the Group on Telecom's decision on the licence fee restructuring will result in a projected revenue loss of over Rs 50 billion during the current financial year.

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Besides the Rs 30.25 billion licence fee dues for 1998-99, the finance ministry stands to take a hit of an additional Rs 20 billion in the face of low realisation of tax revenue receipts that was to accrue from the customs and excise duties from import of telecom equipment.

Work on telecom network deployment and expansion by private operators in the past eight months has practically come to a halt in view of the expected changes in the telecom policy that in turn results in poor revenue collection.

The non-realisation of the Rs 50 billion-plus from the telecom industry is likely to strain the already widening fiscal deficit. The finance minister was expecting to collect around Rs 28 billion for the financial year, as licence fees, from the basic and cellular operators as non-tax revenue receipts.

Clearly, if the GoT had, in principle, decided to go in for revenue sharing, by now the private operators should have been asked to clear their dues before March 31.

The basic and cellular operators would need at least 90 days to get financial closures.

A decision by the end of this month on the licence fees would have been timely for the finance ministry to rake in revenue for the current financial year.

Moreover, the large players including BPL, Escotel, Birla AT&T, who account for a major chunk of the outstandings, would in all likelihood have paid. The revenue sharing formula is expected to have a fixed component that comprises of an entry fee and in order to become non-defaulters the serious players would have cleared their dues from the day the shift to the new revenue sharing regime is announced.

Further delays in the restructuring of the licence regime to as late as February will, however, not be able to take care of the finance ministry's collections for the financial year.

The only way that these payments can be realised is if the GoT announces a broadbased solution within a week or so.

Once the decision is announced, the shift towards revenue sharing will also require strengthening of the telecom regulator who will decide on the revenue-sharing formula. In order to do this, the TRAI Act will be required to be amended, but then again the government is awaiting for an indication from the GoT on this count.

Sources said the next meeting of the GoT was planned in the first week of January so no announcement is likely to be made before the end of the year.

Prime Minister Atal Bihari Vajpayee, in his speech on October 24 at FICCI had announced that all the contentious issues related to licence fees will be resolved before the end of this year.

- Compiled from the Indian media

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