Budget 2021: India expects 60% jump in revenues from telecom sector in FY22

The government expects around a 60% on year jump in revenue from the telecom sector at Rs 53,986.7 crore in FY22 against a modest Rs 33,737 crore earned in the current fiscal year to March 31, according to budget documents.

Industry experts said the Centre’s higher revenue estimates from the telecom industry appear to be factoring in the upcoming 4G spectrum sale in March that is slated to garner around Rs 48,000 crore, a part of which will flow into government’s coffers in FY22.

The telecom department aims to sell 2,250 units of 4G airwaves across seven bands from March 1, worth Rs 3.92 lakh crore at the base price.

The government’s takings in FY21 at Rs 33,737 crore, though, are sharply below the Rs 1,33,027.20 crore it had originally expected to earn.

Analysts say a key reason behind the slippage in the government’s actual telecom revenues in the current fiscal are a shortfall in AGR collections as the big telcos, including Vodafone Idea, Bharti Airtel and Tata Teleservices (TTSL) have paid larger instalments last year.

Also, the earlier expected 5G spectrum sale in FY21 has not happened. Furthermore, the government did not see any additional revenue inflows by way for deferred spectrum payments this fiscal as the Cabinet had back in November 2019 cleared a two-year moratorium on such payments to offer relief to the debt-laden sector that is saddled with over Rs 8.55 lakh-crore of debt.

The government earns revenue in the form of mainly licence fees and spectrum usage charges (SUC) from telecom operators, which are computed based on the AGR of telcos. Telcos annually pay 8% of their AGR as licence fees, and around 4% towards SUC to the government.