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Telecom licence fee to be reviewed

Within six months after the telecom ministry slashed license fees for long distance telephony, the finance ministry is saying what is good for the consumers may not necessarily be good for revenue collection.

If Finance Minister P Chidambaram has his ways, then within two years, tariffs for both international and national long distance calls may go up.

Letters are being circulated between the finance ministry and the DoT, and copies of which are available with NDTV, show that the telecom ministry has accepted the finance ministry's proposal to:

  • Review the current licensee fee for national and international long distance services. The Telecom Commission will review the matter after two years
  • To examine the extent of revenue loss. License fees for both national and international long distance services were slashed by over 50 per cent in November last year to six per cent of the annual gross revenues from 15 per cent.

An immediate review seems difficult, but the finance ministry is insisting that they were not consulted by the DoT to estimate the effects of the slashed license fees on tariffs and also on the volume growth in actual traffic post the November reduction.

The finance minister believes that the license fees should have ideally been brought down to just 10 per cent.

Telecom companies however believe that the current taxation regime in India is already very high compared to the other growing markets worldwide. Any move to further tinker with the rates will be detrimental for the growth of the entire sector.

"We have applied for the ILD license because the fees were brought down," said RSP Sinha, CMD, MTNL.

But it seems the finance ministry is more keen on revenue generation. It has criticised the telecom ministry saying, "DoT should in future evolve a transparent and stable regime in consultation with this ministry of finance, which has the ultimate responsibility for the revenues of the government."

Such an important decision is bound to be controversial as well and needs the direct intervention of the two concerned ministers. But considering the high stakes involved, don't be suprised if it drags to the Prime Minister's Office as well.

 

(www.ndtvprofit.com)

 
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