The telecom department has flagged a nearly 30% sequential fall in licence fee collections from the industry in the quarter ended March, mainly because a slew of promotional plans has hurt revenues of incumbent telcos.Under severe financial stress, the telcos have also sought some exceptions and relief to tide over their financial turmoil, the department of telecom (DoT) has said in a 12-page presentation to telecom minister Manoj Sinha.
Provisional licence fee collections for the fourth quarter of last fiscal stood at Rs 2,300 crore, down from Rs 3,165 crore in the previous quarter, the report said.
Spectrum usage charge (SUC) collections fell to Rs 1,416 crore from Rs 1,553 crore during the same period.
"Spectrum usage charge and service tax collections are also expected to follow the declining trend of license fee," DoT said.
The fall in licence fee collections comes after years of steady growth. "Between 2010-11 and 2015-16, the LF [license fee] collections showed agrowth trend of 8%," the report said.
Promotional tariffs of free voice and data services launched by Mukesh Ambani-owned Reliance Jio Infocomm had hit revenues of the industry as incumbent operators had to sharply lower voice and data prices to retain their users, DoT said.
"In the long term, lower tariffs may not be sustainable with ongoing capex requirements for meeting the growth of telecom services. Continued falling trend in industry revenue will impact the investment and repayment capacity of the industry," its presentation said.
The fall in revenues is despite significant growth in data usage among smartphone users. Data consumption had surged to 2,988 million GB in the quarter ended December, up from 837 million GB in the previous quarter. Details for the fourth quarter are not available yet.
Under severe financial stress, with overall debt of around.`4.85 lakh crore, industry players have now sought financial relief, DoT said.
The telcos have sought a waiver from the licence clause that would invoke bank guarantees submitted by them in case the licence fee collection for a particular quarter is less than the fee collected in the previous quarter.
"The industry has requested that the licence fee for the fourth quarter should be based on actuals and the condition that it should be equal to the licence fee of the last quarter as envisaged in the licence agreement be waived off," DoT said.
It added that in case the government was to accept the request, it would help the industry meet its debt servicing burden.
"One operator has requested to allow more time for payment of instalment of deferred payment for acquisition of spectrum in 2013 auction," DoT said in its presentation to the minister.
The presentation comes within a week of the telecom regulator, Telecom Regulatory Authority of India (Trai), lashing out at DoT for blaming it for the weakening health of the sector and asking it to curb promotional offers that last beyond 90 days. The regulator has maintained that currently, no rules prohibit an operator from offering back-toback promotional offers.
Reliance Jio, after offering back-to-back promotional offers of free voice and data for six months, finally began charging for its services from April 1after it registered over 72 million subscribers. Trai has cleared its promotional offers, which are also under scrutiny in high court and telecom tribunal.
The new telco has now launched an offer whereby a subscriber who enrols before April 15 will get free data and voice services for three months after paying one-time subscription fee of Rs 99, or Rs 303, or any other higher value plan amount.
Telecom Commission, which is the highest decision making body of the telecom department, had last month written to Trai highlighting that allowing a telecom operator to offer promotional offer beyond 90 days was against the rules set by the telecom regulator itself. It had added that the offers were hurting the health of industry.
"These (revenue) collections have fallen from Rs 3,975 crore in Q1 to Rs 3,584 crore in Q2 to Rs 3,186 crore in Q3. It is expected that this revenue will further decline in Q4 by about 8-10%. The annual spectrum usage charge revenues are also likely to face a similar decline," the commission had said in its letter to the regulator.
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