Department of Telecom asks Centre to cut its revenue target from the sector

Key highlights

• DoT is asking Finance Ministry to revise its non-tax revenue from the sector down by 38% to Rs 29,524 crore in FY18.
• The government anticipates outstanding liabilities on the operators to reach Rs 7.29 lakh crore.
• Further price cuts due to intense competition in the sector may lead to 45-67% tariff price cuts.

The Department of Telecom (CoT) has asked the Finance Ministry to revise its non-tax revenue target in FY18 due to ‘severe financial stress' in the telecom sector. 

DoT is requesting for a 38% cut in non-tax revenue due to rapidly declining revenues of the operators, Live Mint reported on Monday.

The letter written by commission member (finance) Anuradha Mitra, has asked for revenue estimates to be revised downwards to Rs 29,524 crore for the current fiscal as opposed to Rs 47,304 crore set out in the Union Budget in February.

Reasons for downward revision of revenue estimates

Licence fee collection on account of spectrum usage charges (SUC), deferred payments and spectrum auction would be Rs 17,056.64 crore as against the earlier projected Rs 26,445.03 crore, the letter specified.

Apart from this, the department said that the promotional offers by the operators have led to fall in revenues and continuation of tariffs of promotional nature will only add to this.

Also Read: Delay in plans to offset debt led telecom industry to crisis

DoT anticipated price cuts of tariff plans is expected to range between 45-67%. The government said that the outstanding liabilities on the operators could reach Rs 7.29 lakh crore.

Telecom sector debt stands at nearly Rs 3.60 lakh crore currently. The entry of Reliance Jio has only aggravated the crisis as a report by ICICI showed that post the new entrant’s launch incremental revenues of the sector fell by Rs 8,240 crore in Q4 YoY.