Telecom industry faces significant challenges and needs reforms to stay competitive.
The Current State of the Telecom Industry
The telecom industry in India is facing significant challenges, including increasing competition, rising costs, and the need for significant investments in infrastructure. The industry has seen a significant increase in the number of players, with over 100 service providers operating in the country. This has led to a decrease in market share for the major players, making it challenging for them to maintain profitability. Key challenges facing the telecom industry in India: + Increasing competition + Rising costs + Need for significant investments in infrastructure + Decrease in market share for major players
The Recommendations of COAI
The Cellular Operators Association of India (COAI) has recommended that the Universal Service Obligation Fund (USOF) levy be abolished. This is due to the fact that the USOF levy is a significant burden on the telecom operators, and it hinders their ability to invest in their networks and services.
The Problem with the Current Definition of Gross Revenue (GR) ##
The current definition of Gross Revenue (GR) is a major concern for the industry. It includes revenue from all telecom activities, including roaming, international roaming, and other non-core activities. This definition is problematic because it does not accurately reflect the actual revenue generated by the core telecom services. The current definition of GR is based on the accounting standards of the International Financial Reporting Standards (IFRS). It does not account for the actual costs incurred by the telecom operators, such as infrastructure costs, personnel costs, and other operational expenses. The definition also includes revenue from non-core activities, such as roaming and international roaming, which are not directly related to the core telecom services.
The Impact of the Current Definition of GR on the Industry ##
The current definition of GR has significant implications for the telecom industry in India. It distorts the revenue figures, making it difficult to compare the financial performance of different companies. The current definition of GR does not accurately reflect the actual revenue generated by the core telecom services.
COAI also requested the government to clarify that service tax is not payable on incremental License Fees.
The Telecom Industry’s Struggle Post Supreme Court Ruling
The telecom industry has been facing significant challenges since the Supreme Court’s ruling in 2019. The ruling, which aimed to curb the misuse of telecom services, has had far-reaching consequences on the industry’s cash flow and projections.
Impact on Cash Flow and Projections
The telecom industry’s cash flow and projections have been adversely impacted due to the Supreme Court’s ruling. The ruling has led to a decline in the industry’s revenue, resulting in a decrease in cash flow. This, in turn, has affected the industry’s ability to invest in new technologies and infrastructure.
COAI has also requested for a review of the current customs duty structure on telecom equipment.
The Impact of the New Customs Duty Structure
The new customs duty structure will have a significant impact on the telecom industry in India. Here are some of the key effects:
The Request for Exemption from BCD Levy
The Confederation of All India Traders (COAI) has requested the government to exempt telecom equipment from the levy of Basic Customs Duty (BCD).
