Govt sees 125% jump in FY21 revenue mop-up from telecom, driven by AGR collections, spectrum sale

The government expects a whopping 125% jump in revenue from the telecom sector at Rs 1,33,027.20 crore in FY21 against Rs 58,989.64 crore earned in the current fiscal year to March 31, according to budget documents.

Market experts said the hefty bump-up in the government’s revenue estimates from the telecom industry likely stems from a combination of higher statutory adjusted gross revenue (AGR) collections from telcos and a mega spectrum sale in early FY21.

The government earns revenue in the form of mainly licence fees and spectrum usage charges (SUC) from telecom operators, which are computed based on the AGR of telcos. Telcos annually pay 8% of their AGR as licence fees, and around 4% towards SUC to the government.

Following the Supreme Court’s verdict on AGR last October, Vodafone Idea, Bharti Airtel and Tata Teleservices alone owe the government Rs 1.02 lakh crore in statutory AGR dues by way of additional licence fees, spectrum usage charges (SUC), penalties and interest. The nation’s top court has backed the government’s definition of AGR to include non-core items.

Spectrum sales through auctions though has been the main contributor to the government revenue. The government has said it plans to hold a mega sale of 4G and 5G airwaves by March-April this year.

Last December, the Digital Communications Commission (DCC), the highest decision-making body in the Department of Telecommunications (DoT), cleared India’s largest ever spectrum sale likely around March-April 2020 that could potentially fetch the government over Rs 5 lakh-crore if the carriers bid for the whopping 8,300 units of 4G and 5G airwaves on offer.

Revenue from the telecom sector though has been falling since late 2016 due to severe financial pressures faced by India’s mobile carriers owing to prolonged, brutal price wars, which has meant lower licence fees and SUC for the government.