Budget 2019: Government targets Rs 41,519 Cr revenue from the telecom Sector in 2019-20

The Govt. has a target of marginal growth with 5.8% increase in revenue from the telecom sector at Rs 41,519.76 crore in 2019-20 FY against the revised revenue estimate of Rs 39,245 crore for the current fiscal year ending March 31. as per data postulate in the interim budget documents.

Receipts from telecom sector mainly relate to the license fees from operators and spectrum usage charges.

According to data published by the Telecom Regulatory Authority of India (Trai) for July-September 2018, the gross revenue of telecom service providers dipped by 12.86 per cent to Rs 57,827.24 from Rs 66,361.7 crore and adjusted gross revenue (AGR) by 13.26 per cent to Rs 36,142.44 crore from Rs 41,668.84 crore on year-on-year basis. Revenue from the sector though has been declining over the last two years due to severe financial pressures faced by India’s mobile phone operators owing to the ongoing price war, which has meant lower license fees and SUC for the government. The price war has led to rapid consolidation of the industry which has now shrunk to three private sector players – India’s older telcos Bharti Airtel and Vodafone Idea, and latest entrant Reliance Jio – from over eight about two years back.

The revenue provision from the telecom sector indicates that the government has not made collection estimates from spectrum auction that is being planned to be held in second half of 2019. The TRAI has recommended auction of about 8,644 MHz of telecom frequencies at an estimated total base price of Rs 4.9 lakh crore, which includes radio-waves for 5G services.

Bharti Airtel and Vodafone Idea, under aegis of COAI, have approached the government for deferment of spectrum payments by 2 years. In 2017-18, the government’s revenue mop-up from the telecom sector fell by about 22 per cent, due to a decrease in earnings of service providers from sale of services.