India Telecom

October 16, 2002
More Relief for P-Telcos: No advance license fee

NEW DELHI -- Private sector telecom service operators would no longer be asked to pay their quarterly license fees in advance. The Department of Telecommunications has allowed them to pay their license dues within 15 days of the closure of the quarter.

DoT sources say the Government is also considering the demand of the operators that they should not be asked to provide extention of bank guarantee six monthly. The operators however want the Government to reconsider the whole question of license fees itself.

Faced with a rising loss, cellular phone companies as well as basic service companies have demanded that the license fee as a revenue generation for government should be replaced with license fee only to meet the cost of regulation plus the five per cent contribution to the universal service fund. At present the cellular operators pay license fee ranging from eight to 12 per cent plus USO contribution of five per cent of their revenues. Similar payments are imposed on the basic and other service providers also.

The accumulated losses of the cellular operators alone were Rs. 7,700 crores by March 2002 on an investment of Rs 21,000 crores. And a revenue of Rs. 4700 crores. The basic service operators who are still in their infancy are yet to see both substantial revenues and operating profits while they are expanding rapidly their network to most of the circles and some of them even providing broadband access.

IT and Communications Minister Pramod Mahajan had declared at the time of his taking over charge of the Ministry that Government would no longer treat the telecom service industry as a revenue milch cow. The operators are awaiting the implementation of this declaration. They believe that the environment within the Government is favourable to this reconsideration though earlier the Government proposal to give them a choice to migrate from heavy license fees upfront to a regime of sharing a fixed proportion of their revenue when they asked for migration from upfront license fee to revenue share arrangement.