FINANCIAL NEEDS OF TELICOM SECTOR

TELICOM SECTOR

• India is the world's second-largest telecommunications

market, with around 1,186.63 million telephone subscriber
bases at the end of June 2019. The telecom market can be
split into three segments – wireless, wireline and internet
services.
JIO ANNOUNCEMENT, 1 DECEMBER 2019
• Reliance Jio increases tariffs by up to 40%  to recover the Interconnect Usage Charges (IUC).
• The IUC is basically the cost paid by one mobile telecom operator to another when its
customers make outgoing mobile calls to the other operator's customers.
• The company said that it has paid IUC to Airtel, Vodafone Idea and other operators
while offering free voice calls to its customers. So far in the last three years, Reliance
Jio has claimed to have paid nearly Rs 13,500 crore as NET IUC charges to the other
operators. But in return, it has received none from them.
• Reliance Jio Infocomm is staring at a potential loss of ₹15,000 crore ($2.1 billion) in
FY19
•  Reliance Industries would have also reported a ₹3,800 crore loss in the December
quarter, instead of the ₹831 crore net profit.”
TELECOM SECTOR DEMANDS TAX RATIONALIZATION

• The telecom players sought the government’s support to

lessen the regulatory levies including the reduction of
Universal Service Obligation Fund (USOF) charge to 3%, and
reduction of license fee from 3% to 1%, as a part of their
pre-budget 2020-21 demand.
SC REJECTS BHARTI AIRTEL, VODAFONE IDEA'S PLEA TO
REVIEW AGR JUDGEMENT

• The supreme court has rejected the petitions of telecom

operators to review its October 24 judgment upholding the
government’s definition of Adjusted Gross Revenue, which
includes non-core revenue. The companies now have until
January 23 to pay over Rs. 92,000 crore in overhead levies
and intrest. Telcos pay 3-5% of their AGR as spectrum usage
charges and 8% as license fees.
• Vodafone Idea and Bharti Airtel have reported record losses
for the September quarter as they set aside money to pay
these dues.
• Vodafone Idea’s loss for the September quarter was at
Rs50,922 crore—the highest in India’s corporate history. Airtel,
too, reported its highest quarterly loss in 14 years at Rs23,045
crore in the quarter ended September.
• At the Hindustan Times Leadership last month, Aditya Birla
Group chairman Kumar Mangalam Birla had said that the
group’s telecom unit, Vodafone Idea, will have to “shut shop"
if there was no relief from the government following the apex
court ruling on AGR.