Telecom Industry Current Affairs - 2020

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What is Adjusted Gross Revenue?

There was a tussle between the Telecommunication industries and the GoI over the license fee settlement. The Union Budget waived penalty for those who paid their interest charges over the disputed tax liabilities before March 2020. The case over the license fee settlement was pronounced in favour of the GoI recently. Following this, several companies like Airtel, Vodafone, TATA have recently paid their dues

What is AGR?

Adjusted Gross Revenue are mainly collected from two main charges namely usage and licensing fee. Apart from these fees, it also includes other revenues like profits, revenue from assets, etc.

The spectrum usage charges are pegged between 3% and 5%. The licensing fee is 8%.

However, since 2005, the Telecom companies have been registering cases in the apex court for proper definition of AGR. In 2015, the SC ruled that AGR included dividend, capital receipts, miscellaneous income, profit from sale of fixed assets, etc.

What was the tussle?

The New Telecom Policy 1999 says that the Telecom operators are required to pay a part of their AGR (Adjusted Gross Revenue) to the GoI as License Fee. While GoI includes revenue from all the assets and profits, the Telecoms argue that the charges under AGR should be pertained only to revenue generated from Telecom services.

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Telecom Ministry forms committee to spell out revival plans for Telecom sector

Acknowledging that country’s telecom industry was under financial stress, Union Telecom Minister Ravi Shankar Prasad had constituted a committee chaired by Telecom Secretary Aruna Sundararajan to spell out revival plans for Telecom sector.

About Aruna Sundararajan Committee

Background: As the Indian telecom sector is under stress for a long time Union Minister has decided to deal with this issue now on priority basis thus for this purpose he will be meeting all telcos ‘at the earliest’ to discuss various sectoral issues and also constituted Aruna Sundararajan Committee to look into entire issue of removing ambiguities in ease of doing business and also to revisit the whole issue of SUC.

Need: Reduction of levies and fees, such as licence fee, SUC and universal service levy, has been a long-standing demand of Telecom industry, along with review of definition of aggregated gross revenue and this will also be main focus areas of committe.

Purpose: To review levies, including spectrum usage charge (SUC), and promote Ease of Doing Business (EDB) in telecom sector.

Mandate:

The Committee headed by Telecom Secretary Aruna Sundararajan would submit its report in 2 weeks’ time.

In case of any issues which require clarity, committee has been directed to seek views of Solicitor General.

Committee would also look into previous recommendations provided by sectoral regulator TRAI (Telecom Regulatory Authority of India) on the issue.

Way Forward

The Government of India is also looking into revival plan for state-owned BSNL (Bharat Sanchar Nigam Limited) and MTNL (Mahanagar Telephone Nigam Limited) on priority and the details for that are being worked out.

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