CONVERGENCE (NEW DELHI): The Cellular Operators Association of India (COAI) has lent its pitch for the reduction of Adjusted Gross Revenue (AGR) from the existing 8% to somewhere around 0.5-1%. 

The Issue  

AGR refers to the total revenue earned by the Telcos from their core services such as mobile and internet services. The annual payment, made by the telcos currently includes license fees and contributions to the Digital Bharat Nidhi Fund, a composite of 8% of their AGR. This leads to a heavy financial burden on their shoulders adding to the charges they pay to buy the spectrum.  3% of the AGR is the license fee while 5% is the Universal Service Obligation (USO) fee. 

Supreme Court’s Decision 

The Supreme Court of India dismissed the review petition of the telecom companies wherein the telcos had requested to rectify the AGR calculation by the authorities, COAI said that includes Bharti Airtel, Reliance Jio, and Vodafone-Idea. 

Double Cost 

Currently, telecom companies not only pay the one-time spectrum charges at the time of auctions but they also pay annual charges on the use of spectrum based on the Adjusted Gross Revenue (AGR) they generate out of the services. This creates a double penalty on them as they are not only buying the house but also paying the rent for living there, COAI noted. 

In contrast, all the investments made in terms of building the network in far-flung as well as busy areas have been spearheaded by the telcos themselves on their own. Ultimately, the Telcos have invested about  $3 Trillion in setting up 5G across India since its auction in October 2022. Additionally, they have spent $4.8 trillion on buying airwaves, in the past decades. Interestingly, they also pay Goods & Services Tax (GST) and Corporate taxes. 

The irrelevancy of the Norms 

The need for license fees stood relevant as long as the sector was governed by the National Telecom Policy 1994 as under the same the licenses were linked to the spectrum but that’s not the case anymore. So, the logic behind the licensing fee and the subsequent charges don't seem to stand any ground as the spectrums have been duly auctioned and bought for use.   

Solutions Proposed 

However, the telcos agree that there is an administrative cost attached to all these which can go up to  0.5-1% of the AGR but not up to 8% necessarily. The COAI asserted that the percentage that is being fetched from them seems a bit too high. 

Network Coverage 

The telcos claimed that this financial burden once taken off would allow them to make coverage of their networks reach in the remote and far-flung areas of the country rather than paying excessively hefty license charges, COAI stated. As the records stand, the telcos have invested heavily in the pursuit of increasing network coverage in their operations at the same time they also seem committed to exploring new avenues like satcom and laser internet technologies as the reports reveal. In such a case the government must consider the request in true spirit to facilitate a friendly and growth-oriented approach towards the telecom sector.