TRAI recommends scrapping of DTH licence fee after FY27

The Telecom Regulatory Authority of India (TRAI) has recommended to the Ministry of Information and Broadcasting (MIB) that the government should discontinue charging direct-to-home (DTH) operators a licence fee after the fiscal year 2026–2027 to ensure the sector remains viable in the long-term.

In its recommendations titled ‘Licence Fee and Policy Matters of DTH Services’, the TRAI has suggested that the licence fee for DTH operators should be brought down to zero in the next three years.

The TRAI contended that the DTH platforms should be treated at par with other regulated and unregulated distribution platforms like multi-system operators (MSOs), headend in the sky (HITS) operators, IPTV providers, DD Free Dish, and OTT services that don’t pay any licence fee.

In the last few years, the DTH sector has been losing ground to DD Free Dish, the free DTH platform of Prasar Bharati, and OTT platforms. As of March 2023, the active subscriber base of the four pay DTH platforms stood at 65.25 million.

Reacting to the TRAI’s recommendations, a DishTV spokesperson said, “The issue of consideration of the DTH license fee has been pending for a long time. We are extremely thankful to the TRAI for having considered the issues raised by the DTH industry and recommending a no license fee regime after 3 years, bringing the license fee down to 3% from the current level of 8% for the next 3 years. The recommendation of TRAI, when accepted by MIB, will bring a level playing field for DTH operators among all distribution platforms.”

Till the licence fee becomes zero, the TRAI has recommended that the DTH licence fee be decreased to 3% of adjusted gross revenue (AGR) from 8% currently.

The DTH industry has long demanded that there be a level playing field between DTH and other distribution platforms when it comes to licence fees. Currently, private DTH operators pay upwards of Rs 1,000 crore annually in licence fees, as per industry estimates.

According to TRAI, if applicable gross revenue (ApGR) has been included as a component of GST, the AGR should be determined by excluding GST paid to the government from ApGR.

It also suggested that the MIB should provide a reliable method for deduction verification through a single-window portal.

According to TRAI, the DTH licencees should submit an initial bank guarantee to the MIB for an amount of Rs. 5 crore for the first two quarters.

The licencee must thereafter provide a bank guarantee to the MIB in an amount equal to the initial bank guarantee or 20% of the expected amount due, which is equal to the licence fee for two quarters and other dues not otherwise securitised, depending on which is higher.

It has also been stated that electronic bank guarantees should be encouraged and permitted for ease of doing business.

“In the highly competitive television distribution market, urgent measures are required for the DTH sector. The quick implementation of these recommendations will help the sector and enable all-round growth,” the TRAI stated.

The TRAI had published the consultation paper in January asking for views from the stakeholders on the licence fee and bank guarantee that DTH operators must provide following a reference from the MIB.

Following a recent price increase, a recent Crisil analysis projects that the DTH sector will generate revenues of Rs 19,500 crore in fiscal 2024, growing at 6-8%. The DTH business owes Rs 7000–8000 crore in licence fees, according to a previous report by Crisil.