Operator price war eroding India government coffers - Mobile World Live

Operator price war eroding India government coffers

20 JUN 2017

India’s Department of Telecommunications (DoT) asked the finance ministry to reduce the estimated non-tax revenue to be collected from telecoms operators for the current fiscal year by more than a third due to widespread discounting and the industry’s heavy debt, The Economic Times (ET) reported.

DoT forecasts revenue collected from operators in the fiscal year ending 31 March 2018 to drop 37 per cent to INR295 billion ($4.59 billion), with revenue from licence fees nearly halving to INR92.6 billion and funds from spectrum usage charges falling 35 per cent to INR170 billion.

Anuradha Mitra, from DoT’s finance unit, said in a letter to the secretary of economic affairs the department also expects zero revenue from spectrum sales even if an auction moves ahead this fiscal year, as operators may not submit bids given their highly leveraged balance sheets, ET reported.

“In view of the severe financial stress in the sector and rapidly declining revenues of all major telecom service providers, revenue targets for DoT for budget estimates 2017-18 will actually require a downward revision,” Mitra said in the letter.

The telecoms sector generated INR787 billion in non-tax revenue for the federal government in fiscal 2016-17.

Operators’ balance sheets have been impacted by a price war sparked by Reliance Jio after it launched 4G service in September 2016 and introduced a series of free data offers.

Bharti Airtel and Idea Cellular posted heavy losses in the January to March quarter.

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Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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