Telcos seek cheap credit, lower licence fees, spectrum charges

Telecom companies on Monday asked the government for reduction in levies such as licence fees, and spectrum usage charges and to facilitate cheap credit to them for lowering cost of borrowing.

Telecom industry association, the Cellular Operators Association of India, requested the government to set up a working group comprising of members from the Department of Telecommunications (DoT), the Telecom Regulatory Authority of India, industry associations and other stakeholders to prepare guidelines for adopting the principle of input line credit to provide funding to telecom companies at a lower rate of interest.

"COAI has requested the government to facilitate funding at a lower rate of interest so as to plough more funds for network upgradation, maintenance and expansion to provide state of the art service at an affordable rate to the people," it said.

DoT on Monday held pre-budget consultations with industry bodies and representatives of all operators. The COAI sought removal of GST on license fees, spectrum usage charges and payment of spectrum acquired in auction and refund of accumulated ITC (input tax credit), which cannot be utilised in the near future.

It also urged the DoT to reduce multiplicity of compliance, audits, investigations and Litigations for large pan-India service providers. It wanted DoT to issue clarification that GST paid on goods and services used for erection, installation of telecom towers is available as an input tax credit.

The COAI presentation said the telecom sector is currently facing extreme financial hardship, and the input/output offsets for GST are out of balance for operators as output (revenue) has been declining, whereas inputs have remained stable or increased. This imbalance between input and output on GST has led to large credits, amounting to almost Rs 35,000 crore.

"We request this amount may be refunded or applied to other government liabilities of operators. GST regulations may be amended or a notification be issued to allow refund of accumulated ITC. This should be done immediately to improve cash flow of the ailing telecom industry," the COAI said.

The association asked the government to exempt custom duty on certain telecom equipment which presently increases the cost of rolling out critical infrastructure.

"Customs duties for the 4G/5G related network products along with other related products should be immediately brought down to NIL as this is critical because of the essential nature of these imports to meet the National Vision of a Digital India. Till the time good quality equipment is available in India at affordable price, BCD should not be increased," it said.

It said currently basic custom duty of 20 per cent is levied on import of most of telecom equipment. Basic customs duty on various 4G/5G related network products, notably MIMO/ LTE products, soft switches and Voice over Internet Protocol (VoIP) equipment, DWDM Optical Transport Network (OTN), Multiprotocol Label Switching-Transport Profile (MPLS-TP) products, has been doubled to 20 per cent, it said, adding that due to the hike, service providers will incur additional cost, and this will over-burden the already stressed telecom industry and hamper rollout of critical networks.