Competition in the Indian Telecom Market is Expected to Rationalise: Vodafone Idea

The telecom sector is being taxed like non-essential items such as liquor and cigarette, instead of being treated as critical infrastructure, according to Vodafone Idea. “We have got customs duty at 23%, GST at 18%. This is pretty similar to the way you treat non-essential items like for liquor or cigarette or something. We paid a lot of money for the spectrum, that is the reason for so much of debt that we are carrying. On top of that, you pay SUC (spectrum usage charge), USOF charges and other charges. It is overly taxed environment,” Vodafone Idea CEO Balesh Sharma told PTI.

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Vodafone Idea has a debt of around Rs 1.2 lakh crore. Spectrum-related payments account for 80% of the current net debt of the company. “There is enough lever with the government. If the government believes in Digital India, they will have to believe in this (telecom sector) being a critical infrastructure and play on bringing the health of the sector back,” Sharma said.

He also said competition in the market is expected to rationalise as the sector has reached the optimum level of competition. “When we talk about Digital India, it will depend on having great infrastructure, that is telecom infra. NDCP published last year very clearly calls this out…industry should no longer be treated as a revenue generating machine for the government but as critical infrastructure which is not the case today,” Sharma said.

The National Digital Communications Policy (NDCP) promises a number of measures to rationalise levies in the sector, but it is yet to show results.

Sharma also said low tariff has been hurting the national exchequer as well. “If the prices don’t go up, it is affecting government’s Digital India (initiative) because industry health is in bad shape. The government earns a heavy amount of revenue share from the industry which is nosediving. Exchequer is getting hurt,” Sharma said.