Indian telecom operators, including Reliance Jio, Bharti Airtel, and Vodafone Idea, are pushing for a reduction in license fees paid to the government. Currently, operators pay an 8% license fee, which includes a 5% universal service obligation (USO) levy. The Cellular Operators Association of India (COAI) is advocating for the license fee to be lowered to 0.5% to 1% of gross revenues.
The COAI argues that the current system of payments based on Adjusted Gross Revenue (AGR) needs to be reevaluated, especially since spectrum and licenses were delinked in 2012. Operators already pay a substantial amount for spectrum usage rights, and additional fees based on AGR are seen as a burden. The COAI suggests that the license fee should only cover the cost of administration, rather than the current 8% of gross revenues.
In addition to AGR-related payments, telecom operators also have to deal with Corporate Social Responsibility (CSR), Goods and Services Tax (GST), and corporate tax. Reducing or eliminating license fee payments could free up resources for network upgrades and expansion, ultimately benefiting consumers, especially in remote areas where digital inclusion is crucial.
The question now is whether the government will agree to lower license fees. The economic and social benefits of easing financial burdens on operators, particularly Vodafone Idea which is facing significant debt, need to be weighed against the potential loss of government revenue. It remains to be seen how this debate will unfold and what decision will be made regarding license fees in the telecom sector.