News Details  :

A committee set up by the Department of Telecommunications, or DoT, to replace the graded structure of telecom licence fees with a uniform one for phone service operators is in favour of a flat fee of 9 percent of revenues, two senior department officials who are members of the panel said.



The committee will make its final recommendations in two weeks.



Telecom firms currently pay between 6 percent and 10 percent of adjusted gross revenue, or AGR, to the government as licence fees for the right to offer phone and related services.



Services such as Internet access are levied at 6 percent, while mobile phone services entail payment of up to 10 percent of AGR. The rates vary according to circles or licence areas as well.



This levy includes a payout worth 5 percent of AGR made to the universal service obligation, or USO, fund, which is used to subsidize the rollout of phone services in rural areas.



AGR stands for gross revenues minus service tax and payments made to enable phone services such as charges for interconnection between two networks.



The move to a flat fee structure will cover not just mobile and fixed-line phone firms but also those with licences for national and international long-distance phone services and Internet access services.



Phone firms have been charged with misreporting their revenues under various service heads in an attempt to lower this payout, and DoT is conducting audits on operators such as Reliance Communications Ltd, Bharti Airtel Ltd, Vodafone Essar Ltd and Idea Cellular Ltd to check on this.



Latest DoT data show the government received Rs 4,200 crore as telecom licence fees for the first two quarters of fiscal 2009; it was Rs 8,100 crore in the previous fiscal.



Mint had reported in April that DoT was looking to implement a flat licence fee structure to simplify the revenue sharing model between phone firms and the government.



On 5 May, DoT formed a four-member committee to look into the merits of implementing a uniform licence fee and to work out a rate for the uniform fee.



“The weighted average of the fees that have been given so far comes to around 9 percent. The committee feels that this would have a minimal impact on the revenues of the operators as there would only be a slight deviation from what they are already paying,� one member said. “The report should be ready in another 15 days.�



Still, the 9 percent levy will fall short of industry expectations.



In its recommendations for the budget for fiscal 2010, India’s primary phone operators’ lobby, Cellular Operators Association of India had sought a uniform licence fee of 1 percent of AGR, excluding the 5 percent USO charge.



“This is not possible at present as this would reduce the revenue to the government,� said the DoT official quoted earlier, the government had shot down adding an earlier proposal to reduce the USO fee from 5 percent of AGR.