Airtel, Vodafone, Idea continue to generate maximum revenues for govt despite Jio entry

Time & Us
Last Updated: August 25, 2017 at 2:55 am

New Delhi: Even as Reliance Jio Infocomm Ltd threatens to upend the Indian telecom market with disruptive moves, its contribution to the government exchequer in terms of licence fee and spectrum usage charges continues to be negligible.

It has paid Rs 47.81 crore to the government as licence fee and spectrum usage charge in the six months ended June, according to data released by the Telecom Regulatory Authority of India (Trai).

That compares with the Rs 2,902.75 crore paid by Bharti Airtel Ltd; Rs 2,005.25 crore by Vodafone India Ltd; and Rs 1,677.67 crore by Idea Cellular Ltd.

Telcos pay roughly 8% of adjusted gross revenue (AGR) as licence fee and an additional 3% as spectrum usage charges, which are the two key avenues of government earnings from the telecom industry.

“There were no earnings in the March quarter as services were free to the customers. Then, started the transition towards paid services, which started to generate revenues. Also, if you have noticed, Jio’s AGR is in the negative and till the time it is negative, they will only pay fixed amount to the government,” a person familiar with Jio’s plans said, requesting anonymity.

The situation should improve from this quarter, the person said.

“The reason why they are showing negative AGR is because of the high number of outgoing calls from their network for which they are paying 14 paise IUC (interconnect usage charge). Therefore, licence fee and spectrum charges are paid on AGR and if AGR is negative, they will pay at minimum level,” a second person from the industry said, also requesting anonymity.

Jio did not respond to an email seeking comments.

Indian telecom companies are in the middle of a fierce battle to protect their turf after the entry of Mukesh Ambani’s Reliance Jio, which has disrupted the market and turned the tide in favour of data through free offers in the beginning and later with ultra-cheap mobile phones that went on sale in the beginning of March.

Telecom companies have repeatedly complained against Jio’s free offers since its launch in September.

Jio initially offered free voice calls and data until the end of 2016 in a promotional offer. The company later extended the offers to 31 March and further to June-end, which has now been rolled back.

Disruption caused by Jio has wiped off significant revenues of telcos, including that of market leader Bharti Airtel. Idea Cellular reported a loss in June quarter. Idea is now merging with Vodafone India to become the country’s largest telecom service provider.

Revenues of telcos will decline further by as much as 6% in 2017-18, according to Icra.

The fall in revenue will be led by a sharper decline in revenues for smaller operators such as Tata Teleservices Ltd, Aircel Ltd and Reliance Communications Ltd.