Troubled Telecom Operators To Save Rs 3,000 Crore Annually As Ravi Shankar Prasad Proposes Reduction In Licence Fee

In a letter to new finance ministers Nirmala Sitharaman, Prasad has highlighted his budget proposals for the telecom sector. (PIB/MeitY)

Telecom Minister Ravi Shankar Prasad has backed for various reforms in the troubled telecom sector, including providing relief of Rs 3,000 crore annually to the telecom operators by revenue share licence fee payment, the Financial Express reports.

In a letter to new finance ministers Nirmala Sitharaman, Prasad highlighted his budget proposals for the telecom sector. He urged for the reduction in licence fees a forth.

At present, the sector operators pay eight per cent of their adjusted gross revenue (AGR) as licence fee. Five per cent of the AGR goes to the universal service obligation fund (USOF) of the rural telephony, and three per cent goes to the government exchequer.


Prasad has proposed that the USOF needs to be cut to three per cent, as the rural teledensity has seen a significant increase since the fund was set up in 2003. If approved, operators would need to pay six per cent of their AGR against the current eight per cent. The proposal would not compromise government revenue.

Telecom operators need to carry out research and development, and deployment of indigenous technology in the country with the money saved from point reduction in USOF levy. Last week, Prasad had set up a committee under DoT secretary to examine such measures.

Other pro-industry measures suggested by him are a mechanism to fast-track GST refunds; separate budget allocation of Rs 1,000 crore to revive BSNL and MTNL, and Rs 500 crore for a scheme promoting domestic manufacturing of telecom equipment, and startups; and allocation of Rs 100 crore for 5G support and new technology.

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