Jio, Airtel Help Govt Reach Telecom Revenues Target

While the government recently bailed out the telecom sector by announcing relief measures, it is interesting to note that in the last seven to eight years, the centre has only been able to achieve its budgetary revenue target from the sector twice. The Indian government had set a revenue goal of Rs 53,986.72 crore from the telecom sector in FY22.

Highlights

  • Bharti Airtel and Reliance Jio have pre-paid their deferred spectrum liabilities.
  • The telecom sector is a vital source of revenue for the government.
  • The government’s revenues from LF and SUC increase as the telcos pay around 8% as LF on their AGR and between 3% to 5% as SUC.

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Reliance Jio, Bharti Airtel

Bharti Airtel and Reliance Jio have pre-paid their deferred spectrum liabilities. The amount pre-paid by the telcos amount to Rs 26,200 crore, and because of this, the government might be able to reach its revenue target from the telecom sector in the current fiscal. A few days back, Bharti Airtel announced that it had pre-paid its deferred spectrum liabilities worth Rs 15,519 crore pertaining to the spectrum auction held in 2014, while Reliance Jio had paid around Rs 10,700 crore for acquiring spectrum in the 2016 auction.

Indian Government Had Fixed Revenue Goal of Rs 53,986.72 Crore in FY22 from Telecom Sector

According to a Financial Express report, the Indian government had set a revenue goal of Rs 53,986.72 crore from the telecom sector in FY22. If the amount pre-paid by the telcos is added to the spectrum usage charge (SUC) and the annual license fee (LF) is added, which would be in the range of Rs 25,000 crore to Rs 28,000 crore, the government should be easily able to achieve its budgetary revenue target from the telecom sector.

As the adjusted gross revenue (AGR) of the telcos rise, the government’s revenues from LF and SUC increase as the telcos pay around 8% as LF on their AGR and between 3% to 5% as SUC.

While the government recently bailed out the telecom sector by announcing relief measures, it is interesting to note that in the last seven to eight years, the centre has only been able to achieve its budgetary revenue target from the sector twice.

In FY22, however, with the one-time gain coming from Bharti Airtel and Reliance Jio, the Indian government should be able to achieve its revenue targets from the telecom sector. The telecom sector is a vital source of revenue for the government, but the sector has been stressed because of the low tariffs and huge market share competition between the telcos.

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