Vodafone Wants To Charge Rs 35/GB From Indian Users; Telcos Demand Minimum Tariff From April 1st

The telecom sector has been going through a bit of rough patch lately and we have kept you updated right since the start of all of this.

Last year, the court had upheld the government’s idea of Adjusted Gross Revenue (AGR), on which it calculates levies on telecom operators. The order led to a sick blow to the telecom industry, as the operators will now have to pay dues for the past 14 years, along with interest and fines.

Vodafone-Idea has been hit the worst by this and is under pressure to pay an estimated amount of ?53,000 crore, of which it has managed to pay only ?3,500 crore to the government yet.

Vodafone-Idea’s Demands to the Govt

Telecom companies have been left scrambling to pay dues after the Supreme Court on 14 February pulled them up for failing to comply with its October verdict. However, it is Vodafone-Idea that has been hit the worst.

Thus, in order to enable it pay statutory dues and make its business sustainable, Vodafone-Idea has demanded fixing minimum tariffs for mobile data at ?35 per GB, which amounts to 7-8 times of current prices, along with calls at 6 paise per minute, starting from April 1.

The company has sought 18 years time to clear the dues, including a three-year moratorium on payment of interest and penalty, to clear its AGR dues of more than ?50,000.

To give you a reference, the current mobile internet prices are in the range of ?4-5 per GB. The demand to raise call and internet rates from Vodafone Idea comes within three months of company raising prices by up to 50%.

According to the company, increase in mobile call and data rates will help it generate revenue to the same level as Vodafone and Idea individually generated in 2015-16. It says that it will take 3 years to get to that level after tariff hike, thus asking for a three-year moratorium for successful payment of AGR dues.

The company says that it would be in a position to meet its liabilities only if the government initiates steps including allowing set offs for GST credit accumulated so far, and permitting staggered mechanism for payment of balance amount of interest, penalty, and interest on penalty.

COAI Asks for a Minimum Floor Price

The Cellular Operators Association of India has urged the government to ensure that consumers pay a minimum floor price for using mobile services from April.

The government levies licence fee and spectrum usage charge based on revenue earned by telecom companies. Telecom companies and government had entered into a dispute over ascertaining revenue calculation.

However, the SC upheld government method of calculating the revenues and ordered telecom operators to clear all dues by January 23, 2020.

The cumulative liability on telecom operators was estimated at around ?1.47 lakh crore by the Department of Telecom in July 2019. For this, the COAI said that floor pricing is imperative to ensure the sector’s sustainability. The industry body represents Vodafone Idea, Bharti Airtel and Reliance Jio.

The industry body has sought that the GST credits lying with the government be adjusted against the dues payable by telcos. It has also sought that after this adjustment, the payment of balance amount of interest, penalty, and interest on penalty be allowed in a staggered manner.

The government may consider granting loan equal to the AGR amount at 6% rate of interest so that the AGR liability maybe discharged immediately.