What does the telecom sector want from the next Govt?

New Delhi: Spelling out its expectation from the new government, the Cellular Operators Association of India (COAI) has said that whoever gets elected should chalk out a clear roadmap to ease the burden of levies on the telecom sector and address issues like cut in licence fee and spectrum charges at the earliest, preferably within 6-9 months. “It would also send a clear signal to both industry and investors that the government is serious about getting the sector back on its feet,” COAI Director General Rajan S Mathews said on Tuesday.

‘Definition of AGR needs to be reviewed’

While ruing that the sector continues to be under strain as most telecom operators are saddled with high debt, the industry body said that for most players, the earnings before interest, tax, depreciation and amortization or EBITDA generated “is not enough to meet the interest expenses”.

“The definition of adjusted gross revenue (AGR) should be reviewed to include revenue from licensed activities only … Telecom Department should adopt the recommendations given by the regulator on the issue of determination of AGR,” Mathews said.

Income from interest, dividend, capital gains from the sale of fixed assets, gains from forex fluctuation, income from rent, insurance claims, and distributors margin should not be included in the revenue of the telecom operators for the purpose of computation of licence fee and spectrum usage charges, the COAI said. It also wants revenue from the sale of handsets and other subscriber terminals like routers to not be included in the AGR.

The issue of double taxation

“Once you address the AGR definition issue, it has cascading benefits.. that is the first thing they (the new Government) should look at. Second, the issue of double taxation…you have got payment for spectrum upfront why are you continuing to tax the industry for the spectrum usage charge and licence…TRAI already recommended that SUC should come down to 1 per cent and licence fee should come down too,” Mathews noted.

He added that if the new government manages to address these issues in the first 6-9 months of coming to power, it would yield “sizeable benefits” for the sector.