Telecom operators and analysts say they are at a loss understanding Centre’s budgetary estimates for the current and upcoming fiscal year. They said the government is likely to miss this target as the numbers don’t add up if the adjusted gross revenue or AGR dues are not factored in. In its latest Union budget, the Central government upped its revenue from the telecom sector to Rs 58,989.64 crore in the current fiscal against the budgeted Rs 50,519.81 crore. The government also pegged up an ambitious target of Rs 1,33,027.2 crore for the next financial year.
Government Would Generate Around Rs 50,000 Crore Revenue via Spectrum Auction
The operators estimate the government would generate Rs 40,000-50,000 crore as upfront revenue from upcoming spectrum auctions and around Rs 20,000-25,000 crore from licence fee and deferred spectrum instalments. This amount totals to Rs 75,000 crore which remains far fetched from the estimated Rs 1.33 lakh crore budget for 2020-21 according to them.
“We are at a loss to understand the doubling of expected revenue from the telecom sector and we await clarity on the components of the budgeted amount,” said Rajan Mathews, Director General of Cellular Operators Association of India (COAI), as reported by ET Telecom.
Meanwhile, Economic affairs secretary Atanu Chakraborty on Monday said that AGR dues from the telecom operators were not calculated in the estimates for either the current or next fiscal.
A Supreme Court order in October 2019 directed telcos to pay dues amounting to Rs 1.47 lakh crore on account of revenue share, interest and penalties. Vodafone Idea was the worst hit, and owes more than Rs 53,000 crore, while Bharti Airtel, has outstanding dues of more than Rs 35,500 crore, and Tata Teleservices has to pay around Rs 14,000 crore.
Telecom operators have now sought more time to pay and filed a petition in the apex court to be allowed to negotiate a payment schedule whereby they get to pay over several years. The court is yet to hear this matter.
Industry insiders say without these AGR dues, or at least part of them, achieving the budgeted estimates would be difficult. They revealed if the Supreme court doesn’t provide relief to telecom operators achieving this target will be more difficult as Vodafone Idea may have to shut down its operations.
“The only way the DoT (Department of Telecom) may come close to achieving its target for FY21 is if it includes AGR of at least Rs 40,000 crore. For the current fiscal, the government should factor in an upfront AGR payment of Rs 20,000-25,000 crore from the telcos if it intends to meet its target,” said Rajiv Sharma, head of research at SBICap Securities.
The government, on the other hand, said the higher revenue projection in its budget is expected on account of spectrum charges and license fees from telecom companies.
The next auction said to be India’s largest with 8,293.95 MHz of airwaves at an estimated total base price of Rs 5.77 lakh crore expected to go under the hammer. Analysts and industry experts say this is highly unlikely given the tepid response from 5G auction since the telecom sector is already reeling under huge losses.
The latest budget is either an ambitious target or the government would look for alternative resources, said analysts. Therefore, whichever way the government looks, it is likely to miss the revenue target for both financial years.