The Telegraph
Since 1st March, 1999
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Mahajan’s men on middle path
- Officials suggest 8% revenue share against minister’s 1%

New Delhi, Oct 6: Union communications ministry officials have suggested a revenue share of 8 per cent for all categories of telecom operators against 1 per cent suggested by communications minister Pramod Mahajan.

Mahajan may have given finance minister Jaswant Singh a few sleepless nights when he announced that revenue share between telecom service providers and the government could be brought down to 1 per cent from the existing 12 per cent.

Currently, category A circle operators pay a revenue share of 12 per cent, category B 10 per cent and category C 8 per cent. This brings in a revenue of Rs 200 crore per quarter from all the operators taken together.

“The loss of total revenue generated will be passed on to the government. But if we have to increase the tele-density, then we will have to compromise on the revenues in the short term. This point has been communicated to finance ministry officials and we expect to get a favourable response from them,” said a senior communications ministry official.

“Jaswant Singh may not get a heart attack but is sure to perspire even with the 8 per cent that has been worked out by us. The proposal will be placed before the Telecom Commission on Monday and then before the minister for final approval,” communications ministry sources said.

Under the National Telecom Policy 1999, all the telecom service providers and value-added service providers were allowed to migrate from a licence fee regime to a revenue sharing system.

According to the original agreement that was offered to all the operators—cellular, fixed line, paging, mobile radio trunking, V-sat—the government had proposed a revenue share of 15 per cent of the gross revenue of the licence as per the provisional licence fee.

Later, the Telecom Regulatory Authority of India fixed the revenue share at 12 per cent of the gross revenue. The revenue share also includes 5 per cent for the Universal Service Obligation Fund (USO Fund).

The telecom operators had been consistently asking for a revenue share equivalent to that prevalent in the US and other countries. Currently in the US and a few European countries, the revenue share has been fixed at about 3 per cent of the gross revenue, a senior executive of a telecom company said.

However, the government is unlikely to change the other charges like Wireless Planning Commission charges and spectrum charges for the operators.

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