High taxes, spectrum, IUC cut hit industry: Old telcos

Seeking immediate relief for the stressed telecom sector, older operators -- Airtel and Idea Cellular -- Wednesday slammed high levies, increase in spectrum cost and regulatory norms. "Taxation on industry is very high. It is in the range of 2932 per cent. Spectrum cost is one of the highest and tariff being one of the lowest. All of this need to change to realise dream and vision of Digital India," Bharti Airtel MD and CEO for India and South Asia, Gopal Vittal said at the India Mobile Congress here. Investment by Bharti Airtel in the last 2 years has been more than that of the past 20 years put together, he said.

"The cost of spectrum is amongst the highest in the world and tariffs being the lowest in the world," Vittal said. He put the debt of the industry at about Rs 4,50,000

crore and return on capital at about 1 per cent and "all of this is a problem to acknowledge". This, Vittal stressed, needs to change if the Digital India dream is to be achieved. He also highlighted issues concerning laying fibre and the policy of mergers and acquisitions.

He explained that telecom companies find it "painful process" to find access to government buildings when

they want to lay down fibre.

Idea Cellular MD and CEO Himanshu Kapania said recent market developments have drastically altered industry dynamics, resulting in the sector passing through a phase of severe "financial and mental stress". Terming the regulatory and financial issues being faced by the sector as the "elephant in the room that no one is talking about", Kapania flagged the recent cut in interconnect usage charge (IUC), firm spectrum prices and high levies like licence fee and GST as big constraints. "No industry can survive the drastic fall in voice and data tariffs that have plunged to "below cost" levels over the last one year," Kapania added.

Telcos' under financial stress: Sinha Communications Minister Manoj Sinha Wednesday said the government is keeping a watch on the financial stress in the telecom sector and assured the industry of an "intervention" when required. Addressing a conference at the India Mobile Congress, Sinha said that "legal opinion" is being taken on certain aspects of inter-ministerial panel's proposals related to stress in the Indian telecom sector . He also admitted that some players were under financially stress.