Government should meet telecommunications budget target

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Recently, Bharti Airtel paid Rs 15,519 to the Department of Telecommunications (DoT) for the prepayment of all deferred spectrum liabilities acquired during the auction held in 2014, while Reliance Jio paid around Rs 10,700 crore for the spectrum acquired at the 2016 auctions.

The prepayment of deferred spectrum liabilities by Bharti Airtel and Reliance Jio amounting to over Rs 26,200 crore will enable the government to meet its budget revenue target from telecommunications in the current fiscal year.

Recently, Bharti Airtel paid Rs 15,519 to the Department of Telecommunications (DoT) for the prepayment of all deferred spectrum liabilities acquired during the auction held in 2014, while Reliance Jio paid around Rs 10,700 crore for the spectrum acquired at the 2016 auctions.

The government had set a revenue target of Rs 53,986.72 crore from telecommunications services for fiscal year 22. Once the annual license fees and spectrum usage fees paid by telecommunications operators, which would be in the order of Rs 25,000 crore to Rs 28,000, are added to the amount paid by Bharti and Jio, the budget target is likely to be achieved.

Government revenues from license fees and SUC increased due to higher Adjusted Gross Revenues (AGRs) of all telecom operators. Telecom operators pay 8% license fees on their adjusted gross revenues, while SUC ranges from 3% to 5% for different operators.

In recent years, the government has failed to meet its revenue target from telecommunications services. For example, for fiscal year 21, he had set an overly ambitious target of 1.33 lakh crore, which was later revised to33,737 crores. The revenue target for fiscal year 21 may have been set in anticipation of the full payment of the telecommunications operators’ AGR dues, which they were required to pay under the Supreme Court order in October 2019.

For fiscal year 20, the government managed to exceed the revenue target, due to the partial payment of AGR contributions amounting to approximately Rs 30,000 crore by three operators – Bharti Airtel, Vodafone Idea and Tata Teleservices.

In the absence of this one-off gain, the government would not have achieved its objective.
Interestingly, in the past seven to eight years, the government has only been able to meet the budget estimate from telecommunications revenues twice.

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