TRAI Recommendations on 5G Spectrum to Determine Govt Revenue from Auctions

It is worth noting that the telecom operators wanted the 8% license fee (LF) to be scrapped as it also includes 5% of USO (Universal Obligation Service) fund obligation and the remaining 3% of license fee. Instead, the telcos had requested the government to only charge 1% LF of their adjusted gross revenues (AGR).

Highlights

  • For the current financial year, the centre is surely going to make more than its estimates.
  • As soon as the TRAI recommendations are in hand, the centre can make an estimate about the kind of revenue that will be generated from the telecom sector.
  • The TRAI is currently working on the recommendations for 5G spectrum auctions and is likely to submit it to the DoT by March end or earlier.

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The recommendations that the Telecom Regulatory Authority of India (TRAI) will give for the 5G spectrum auctions will largely determine the kind of revenue that the government will make in the coming financial year. As for the current financial year, the centre is surely going to make more than its estimates. For this year, the budget estimates from the telecom sector was Rs 53,986 crore, but the revenues may go up as high as Rs 71,959.24 crore. The Department of Telecommunications (DoT) has already collected Rs 69,559 crore as of February 3, 2022.

Coming Financial Year Budget Estimates Set Lower by the Centre, Earnings to be Much More

K Rajaraman, telecom secretary, told PTI that the earnings from the telecom sector would be significantly higher than the budget estimates, but an exact number can’t be given at the moment. It is because the revenues would heavily depend on the kind of recommendations that the TRAI gives on the pricing of the spectrum.

As soon as the TRAI recommendations are in hand, the centre can make an estimate about the kind of revenue that will be generated from the telecom sector.

It is worth noting that the telecom operators wanted the 8% license fee (LF) to be scrapped as it also includes 5% of USO (Universal Obligation Service) fund obligation and the remaining 3% of the license fee. Instead, the telcos had requested the government to only charge 1% LF of their adjusted gross revenues (AGR). However, nothing of this sort was announced at the recently held budget for FY23.

The TRAI is currently working on the recommendations for 5G spectrum auctions and is likely to submit them to the DoT by March-end or earlier. Based on that, the government will take a few months and hold a 5G spectrum auction for the private telcos and possibly the satcom players. It will be interesting to see how the pricing is set for different bands as the telcos wanted huge reductions.

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