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Saturday, October 24, 2020

DoT unlikely to agree on lower licence fee recommended by Trai, alter AGR definition

In June, the then Cellular Operators Association of India director general Rajan Mathews had said that the DoT should revise the definition of AGR for all future purposes to avoid any further burden on the sector.

Written by Aashish Aryan | New Delhi | September 21, 2020 5:16:33 am
Department of Telecommunications, Dot, Telecom Regulatory Authority of India, licence fee of telcos, lowering licence fee of telcos, telcos licence fee, indian express newsThe DoT, however, may not alter the definition of AGR as demanded by the telcos after the Supreme Court verdict, another official said. (Representational)

The Department of Telecommunications (DoT) is unlikely to accept the Telecom Regulatory Authority of India (Trai) recommendations on lowering the licence fee of telcos from 8 per cent to 6, according to sources in know of the development.

The DoT may, however, consider lowering the component of universal service obligation fund (USOF) to 3 per cent from 5 per cent of revenue, sources said. The lowering of USOF component is possible as the funds collected by the telecom operators have been lying idle for quite some time now, an official said.

“Close to Rs 50,000 crore is lying idle in that (USOF). Most of it is used for improving services in the rural areas, which have either stopped or are going slow for one reason or other,” the official said, asking not to be named.

In its recommendations in 2015, the telecom regulator had suggested lowering the licence fee of telcos to 6 per cent from the current 8 and suggested changing the definition of adjusted gross revenue (AGR).

Trai had then said that income from non-telecom sources should not be considered to define AGR of telcos.

The DoT, however, may not alter the definition of AGR as demanded by the telcos after the Supreme Court verdict, another official said.

In June, the then Cellular Operators Association of India director general Rajan Mathews had said that the DoT should revise the definition of AGR for all future purposes to avoid any further burden on the sector.

The definition of AGR, now settled by a Supreme Court verdict, had been the biggest bone of contention between regulators and telcos. All telecom companies that operate in India pay a part of their revenues as licence fee and spectrum charges to the DoT for using the spectrum owned by the Centre.

In its definition of AGR, the DoT had said that telcos must cover all the revenue earned by them, including from non-telecom sources such as deposit interests and sale of assets. The telcos were opposed to this and had challenged this definition in several forums, including the Supreme Court.

On October 24, 2019, the apex court upheld the DoT’s definition of AGR and said since the licensee had agreed to the migration packages, they were liable to pay the dues, the penalty on dues, and the interest on penalty due to delay in payments. This month, the top court asked the telcos to pay the AGR dues in the next ten years.

These yearly instalments will have to be made by March 31 of every succeeding financial year and a compliance report by the companies as well as the DoT has to be filed by April 7 of that year, a three-judge Bench headed by Justice Arun Mishra had said in its judgment, bringing a close to the nearly 20-year old issue.

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