Telcos cut tariffs, licence fee revenue shrinks

Government revenues from telecom operators' licence fee is set to cross Rs 10,000 crore (Rs 100 billion) in 2009-10, but the overall rate of growth has slowed due to the sector's shrinking income because of lower tariffs.

A senior department of telecommunication official said the estimated figure for 2009-10 is Rs 10,000 crore (Rs 100 billion) and the actual figures could be a little higher.

However, he said the rate of growth that has been between 10-17 per cent over the last many years has declined to 4-5 per cent.

Telecom operators paid Rs 7,605.61 crore (Rs 76.05 billion) as licence fee till January, 2010.

According to DoT data, operators paid Rs 7,016.59 crore (Rs 70.16 billion) in 2006-07, Rs 8,826.45 crore (Rs 88.26 billion) in 2007-08 and Rs 9,759.81 crore (Rs 97.59 billion) in 2008-09.

The official said the sharp fall in revenue growth was also due to the disconnection of nearly 20 million mobile handsets without international identification numbers and a three-month ban on the sale of prepaid mobile phone connections in Jammu and Kashmir.

However, he said the main reason for the fall was the nasty tariff war cutting into the revenues of the the operators.

Telecom operators do not pay taxes to the DoT but pay a percentage of the revenues as levy to the government.

Tariffs touched new lows last year as competition increased with the entry of new operators, offering rates as low as one paise a second to garner a greater share of the market.

The lower price elasticity in the market at these price levels led to the revenues of many of the telcos taking a hit.

The growth has fallen despite the mobile user base touching over 520 million with an addition of 12-15 million new mobile users each month.

For the GSM segment, the average revenue per user per month has decreased by 12.4 per cent to Rs 144 in the October-December quarter from Rs 164 during the previous quarter, according to Telecom Regulatory Authority of India.

ARPU for the CDMA segment declined by 7 per cent to Rs 82 in the three-month period and while the gross revenue for the telecom operators increased by 2.32 per cent to Rs 39,756.64 crore (Rs 397.56 billion), the adjusted gross revenue increased by just 0.04 per cent to Rs 29,125.67 crore (Rs 291.25 billion) for the said quarter.