Telecom sector is being taxed like non-essential items

Balesh Sharma, CEO, Vodafone Idea said in a statement, the telecom sector is being taxed like non-essential items such as liquor and cigarette, instead of being treated as critical infrastructure. "We have got customs duty at 23%, GST at 18%," he said. "We paid lot of money for spectrum, that's the reason for so much of debt that we're carrying," Sharma said. The policy makers and the political parties has to think positively on how to evolve the debt-ridden Telecom sector.

We paid lot of money for the spectrum, that is the reason for so much of debt that we are carrying. On top of that, you pay SUC (spectrum usage charge), USOF charges and other charges. It is overly taxed environment, Balesh Sharma said.

Vodafone Idea has a debt of around Rs.1.2 lakh crore. Spectrum related payments account for 80% of the current net debt of the company. "There is enough lever with the government. If government believes in Digital India, they will have to believe in this (telecom sector) being a critical infrastructure and play on bringing health of the sector back," Sharma said as per the release. He further said, the competition in the market is expected to rationalise as the sector has reached the optimum level of competition.

The National Digital Communications Policy (NDCP) promises number of measures to rationalise levies in the sector but it is yet to show results. Sharma said, at the same time the low tariff has been hurting the national exchequer as well. "If the prices don't go up, it is affecting government's Digital India (initiative) because industry health is in a bad shape. Government earns a heavy amount of revenue share from the industry which is nosediving. Exchequer is getting hurt," Sharma said.

Asked about the company's interest in buying additional spectrum for 5G services, Sharma said, it has the highest spectrum holding in the country and does not need any further spectrum as per current business strategy."5G - the future technology - whatever benefits 5G can bring in current ecosystem are already being put forward by the company. In technology, later you buy the better you buy," Sharma said. Vodafoneidea is building 5G ready telecom network. We have 5G like quality. However , 5G ecosystem will take long time to evolve," Sharma added.

Lastly, the recent poll promises may help the sector by pushing up consumer spending on communications services.