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Government Expects To Double Revenue From Telecom Sector In Next Financial Year

Despite the telecom industry facing troubles due to the AGR and Q2 loss, the government seems hopeful that the revenue from the sector will be double by FY21. It expects the generated revenue will be close to Rs. 1.33 lakh crore in the coming financial year.

The government suggested that there are many steps taken by the government like increased license fees, Supreme Court order on AGR, and spectrum auction. It said that the current financial year is expected to generate Rs. 58,989.64 crore. “Receipts under ‘Other Communication Services’ mainly relate to the license fees from telecom operators and receipts on account of spectrum usage charges,” the Budget document said. In fact, the analyst also believes that the AGR dues and upcoming auctions are the reason behind the government estimation.

“Despite the deferral of spectrum payments due in FY2021 and FY2022, the higher BE for FY2021 can be attributable to some participation in 5G spectrum auctions and expectation of payments of AGR-related dues,” Ankit Jain, assistant vice-president, corporate ratings, ICRA Ltd, said in a statement. It is worth mentioning that last year in October; the Supreme Court ruled in favor of the government and asked operators to pay Rs. 1.47 lakh crores in dues. The amount includes both the license fees and the spectrum usage charge (Rs. 92,642 crore and Rs. 55, 0541.51 crore).

Meanwhile, industry experts expressed their disappointment with the budget as their issues were not resolved. Rajan Mathews, DG at the industry body COAI, said, “…it is disappointing that there were no announcements made regarding the rationalization of levies and taxes currently imposed on the severely distressed telecom sector and … telecom was not given an infrastructure status even though a slew of crucial reforms has been announced on infrastructure. The telecom sector, which is the backbone of the country’s economy, did not receive significant support.”