Debt burden of Indian telecom sector to rise as operators get into bruising tariff war- ASSOCHAM/KPMG study

Even as the telecom industry finds itself in a tariff war with entry of a major player, an ASSOCHAM-KPMG paper has pointed towards the operators grappling with a huge debt burden of Rs 3.80 lakh crore, reinforcing a case for rationalisation of taxes and other levies along with spectrum charges. The telecom operators have an accumulated debt of around INR 3.8 lakh crore. An additional customs duty of 10 per cent will lead to an increase in cumulated duty to 29.44 per cent, reveals the joint study.


Simplification and rationalization of tax regime will provide required financial stability to Indian telecom industry. Presently, multiple charges and taxes are levied on the sector in addition to the charges paid by other industries (such as corporate tax, VAT, etc.). Spectrum Usage Charges (SUC) in India are comparatively higher than other economies, noted ASSOCHAM-KPMG joint study.

“Even though consumers are having a last laugh with competitive offers from the major players , the service providers need to penetrate further into the fast expanding data market and create a volume that would make their cash flow running, ” ASSOCHAM Secretary General Mr D S Rawat said.

Telecom sector is expected to contribute 8.2 per cent or INR 14 lakh crore to the GDP by 2020 and one of the highest contributors to the GDP over the last decade, adds the study. Industry expects that there is a no rationalisation of multiple levies imposed. TRAI has recommended that license fee should be reduced to 6 per cent and Universal Service Obligation Fund to 3 per cent from current levels of 8 per cent and 5 per cent respectively.

Further, as per a study cited by COAI, reduction in Spectrum Usage Charges (SUC) by 1 per cent can increase GDP by INR1.76 lakh crore, highlighted the study. OTT service providers are playing a significant role in driving data consumption and transforming consumer behaviour. A major contributor to the increased data traffic is the growing customer demand for video which is expected to experience a further boost with the advent of 4G services.

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16 Comments on "Debt burden of Indian telecom sector to rise as operators get into bruising tariff war- ASSOCHAM/KPMG study"


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September 28, 2016 8:30 pm 8:30 PM

Be ready to face 1 GB data for 28 days at.more than Rs.400. I challenge. This will happen regardless of JIO’s presence. I am not talking about bulk data packs.

September 28, 2016 4:39 pm 4:39 PM

Fraudtel debt 100000 cr and fraudafone debt 90000 cr

September 28, 2016 4:28 pm 4:28 PM
Avoid did you read that. Go data way transform yourself (only 2g and 4g,skip patchy 3g,use that spectrum for 4g).Buy spectrum, build network with high capacity,.Get more data users ON 4g ship with better plans that user dont think twice to stream, generate advertising revenue from subscriptions and with premium content,. Now ARPU cross 500 at minimum…each tick monthly recharges 13 times in a year, just like a postpaid user. Like never happened before. Say if this happens company like jio(say) can turn into profits in just 3-4years..first service providers must start providing, not like Avoid and coai who say… Read more »