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Promise of more connectivity, but no good news for telecom firms in Budget 2020

The Centre has estimated revenues of Rs 1.33 lakh crore under the ‘other communication services’ head for 2020-21, 125 per cent higher than Rs 58,989.64 crore as per revised estimate of 2019-20.

Written by Pranav Mukul , Karishma Mehrotra | New Delhi | Updated: February 2, 2020 10:22:40 am
Budget 2020, Nirmala Sitharaman Budget 2020, telecom sector budget 2020, Indian Economy Budget 2020, Economic slowdown budget, India gdp grwoth budget, Budget news, Indian Express In the footnotes to the receipt budget, the government mentioned: “Receipts under ‘Other Communication Services’ mainly relate to the license fees from telecom operators and receipts on account of spectrum usage charges.

While the Union Budget laid out plans for setting up of data centre parks and increased broadband connectivity throughout the country, it has almost sent shock waves towards the telecom industry by indicating that not much relief is expected for the sector towards the AGR-related dues that the companies owe the government. The Centre has estimated revenues of Rs 1.33 lakh crore under the ‘other communication services’ head for 2020-21, 125 per cent higher than Rs 58,989.64 crore as per revised estimate of 2019-20. This is despite the government’s decision to defer spectrum payments for 2020-21 and 2021-22.

In the footnotes to the receipt budget, the government mentioned: “Receipts under ‘Other Communication Services’ mainly relate to the license fees from telecom operators and receipts on account of spectrum usage charges. Department of Telecom collects recurring licence fees from various Telecom Service Providers licensed by it…Spectrum Usage Charges are levied by the department from the Telecom Service Providers (Mobile Commercial VSAT etc.) for usage of spectrum and are calculated as a percentage of their Adjusted Gross Revenue (AGR) depending upon the quantum assigned for their network.”

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The issue primarily affects two telecom players — Vodafone Idea and Bharti Airtel — that face dues of Rs 53,039 crore and Rs 35,586 crore, respectively, towards AGR-related payments. The companies are in process of seeking relief from the Supreme Court, which has already asked the firms to pay up and rejected their plea to review its earlier order.

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Vishal Malhotra, Tax Leader, Telecom Practice, EY India, said: “The budgeted receipts from AGR dues and potential spectrum auctions seem to indicate that not much relief may be forthcoming on the AGR dues arising from the adverse Supreme Court ruling.”

The operators have submitted a modification petition to the Supreme Court, seeking permission to negotiate terms and timelines of payment of their statutory dues and the apex court is expected to hear the plea on Monday. Meanwhile, the Department of Telecommunications is also working on spectrum auction, which is likely to be held in April-May 2020.

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Further, in line with the government’s focus on keeping more data within the country’s borders, Finance Minister Nirmala Sitharaman said in the budget speech that the Centre would soon bring out a policy to enable private sector to build data centre parks throughout the country, with an aim to enable firms to incorporate data in every step of their value chains. “This step will help analyse the data better and make a well-informed decision regarding resource allocation for social development of a specific geography and demography,” said Takayuki Inaba, Managing Director of network technology firm NEC Technologies India.

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