Telecom operators are knocking on government doors to bail them out of a severe financial crunch caused by the coronovirus pandemic.
Last week, the operators sent a letter to finance minister Nirmala Sitharaman, seeking a relief package. The pandemic has limited the payment capability of the industry covering not only salaries but also interest and taxes.
The Cellular Operators Association of India (COAI) has also requested an exemption from service tax on the amount of licence fees and spectrum usage charges, payable in compliance with the Supreme Court order on revenues. Legal experts said it was a grey area.
The operators have pleaded, they were facing a severely disruptive impact on the global supply chain, demand and supply elements and on cash flows.
“It is multiple whammies that the telecom industry is experiencing — no doubt any relief is a significant relief,” said S.D. Saxena, telecom consultant and former director finance of BSNL.“The enterprise business for the operators and the biggest revenue earner has collapsed due to Covid-19. A surge in voice and data calls cannot offset the revenue from businesses.”
In its plea, the COAI has sought liquidity and a low-cost funding option. The operators want an immediate refund of the unutilised input tax credit or a soft loan at MCLR rate, using the GST input credit as a collateral.
Further, the letter seeks the rationalisation of regulatory levies, such as the reduction in the spectrum usage charge to 3 per cent and licence fee contribution to 3 per cent from current 8 per cent.
The COAI has also urged the finance minister to exempt the industry from the levy of GST, or service tax, on license fees, spectrum usage charges and the payment of spectrum acquired in auctions.
“Every industry is facing a financial crisis. Telecom is feeling the heat more because of the payout to abide by the Supreme Court Order, before Covid-19. The government cannot allow any sector to persish, but yes, telecom is at the front,” said Jaijit Bhattacharya, president, Centre for Digital Economy Policy Research.
Last week, the operators were given a relaxation of six weeks from the respective due dates for submission of all monthly and quarterly reports for the period ending March 31, 2020.
M. Rajendran is a freelance journalist who once worked with The Telegraph