Govt policy should allow telcos to cover costs: Idea
Speaking to reporters after its meeting, a top Idea official said: "Government has choice of any policy...But it should cover costs. All policy framework everywhere says that cost of network should be recovered."
Idea Cellular today said at the IMG meeting that it supports lower data prices but the government policy framework should allow operators to recover their network costs.
Vodafone, on the other hand, said that call connect charge - currently at 14 Paise - is already "below cost" and any further cut in these inter-operator charges could hurt rural coverage.
Besides, it favoured lowering of spectrum usage charges (or doing away with it) as also that the USO levy should be reduced to 3 per cent from 5 per cent and then be phased out.
Making presentations before the inter-ministerial group (IMG), incumbent operators, including Airtel, flagged various issues facing the industry, leading to huge debts.
Speaking to reporters after its meeting, a top Idea official said: "Government has choice of any policy...But it should cover costs. All policy framework everywhere says that cost of network should be recovered."
The Idea official further said that the company is completely in agreement that data prices need to come down.
Flagging the high incidence of taxation faced by the industry, the official said levies like licence fee, spectrum usage charges and USO should be subsumed by GST, the new indirect tax regime to be rolled out from July 1.
Vodafone too has suggested that licence fee be subsumed by the Goods and Services Tax and if that's not possible then GST rate should be reduced to 5 per cent from 18 per cent for telecom services.
Airtel officials, however, refused to comment on the presentation made to the government.
The IMG, constituted to suggest policy reform to mitigate sector's financial stress, has been holding dialogue with individual operators this entire week.
It has already met senior executives from Reliance Jio, Reliance Communications, Tata Teleservices and Aircel. It has also held discussions with telecom PSUs Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd too.
The IMG also met four major lenders, including SBI, who voiced concerns over "stress" in the telecom sector and flagged possibility of defaults by debt-laden operators.
The incumbent operators have been vocal about the onslaught of free voice and data offers by the aggressive newcomer Reliance Jio (RJio), and its impact on the industry's revenue in 2016-17.
Reliance Jio earlier this week, however, ascribed the financial stress in the telecom sector to existing operators like Bharti Airtel and Idea running businesses on debt and investing heavily in unrelated sectors.
It alleged that incumbent operators have been reluctant in infusing equity and hence the financial stress is their own creation.
The operators on the other hand cite Rs 4.6 lakh crore cumulative debt, and are making a case for urgent relief measures like extension on payment of deferred spectrum liability to a period of 20 years, and cut in licence fee and spectrum usage charges.
With over 1.16 billion mobile users, India is the second largest telecom market in the world, after China.
Telecom regulator Trai also met all the operators yesterday to discuss the industry's financial difficulties and measures that can be taken to ease the situation. Idea asked Trai to fix a minimum floor price for voice calls and data offerings.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Senior Citizen Latest FD Rates: Know what major banks like SBI, PNB, Canara Bank, HDFC Bank, ICICI Bank are providing on fixed deposits
Gratuity Calculator: Rs 38,000 as last-drawn basic salary, 5 years and 5 months of service; what will be gratuity amount?
Top 5 Small Cap Mutual Funds with best SIP returns in 1 year: See how Rs 25,000 monthly investment has grown in each scheme
Top 7 SBI Mutual Funds With Best SIP Returns in 1 Year: Rs 25,000 monthly SIP investment in No.1 fund has jumped to Rs 3,58,404
SBI 5-Year FD vs MIS: Which can offer higher returns on a Rs 2,00,000 investment over 5 years? See calculations
03:19 PM IST