Government Might Reduce License Fees To 5% From 8%: Report

After providing two-year moratorium on spectrum payments, the government is now planning to provide another relief to the industry. Now, it has been reported that the Department Of Telecom (DOT) is likely to reduce license fees on AGR to 5 or 6 percent from the current 8 percent, reports Economic Times.

According to the report, the ministry is planning to meet this week to discuss the license fees, which will help telcos (Reliance Jio, Airtel, and Vodafone-Idea) to save Rs. 4,000-5,000 crore. However, experts believe that this will not be sufficient for the operators.

Both Airtel and Vodafone Idea have to Rs. 53,000 crore and Rs. 35,000 crore, as the Supreme Court directed them to pay their dues of adjusted gross revenue (AGR).

"The government cannot do anything about the AGR dues, which has been decided by the Supreme Court. From the initial suggestions of relief measures, a license fee cut will be taken up now following the two-year spectrum moratorium already announced," a senior official was quoted by Economic Times.

Furthermore, analysts believe that this will help Reliance Jio to save Rs. 1,500 crore, Airtel can save Rs. 2,000 crore and Vodafone Idea will save Rs. 8,000 crore, if the license fee will be reduced to 5 percent from 8 percent. Apart from that, the TRAI is planning to fix floor pricing for tariffs. However, there are chances that this will increase tariff plans further. Besides, TRAI said no to zero IUC rates until January 2021.

The ministry has also formed a committee to discuss the relief measures for the telecom industry. The government has announced a two-year moratorium on spectrum payments. The telecom operators are under a lot of pressure due to Q2 loss and to AGR liability. In fact, telecom operators like Bharti Airtel and Vodafone Idea have filed a review petition on the Supreme Court.