Govt should stop looking at telecom spectrum as just a source of revenue

Now that the Supreme Court has spoken its mind on the matter of adjusted gross revenue (AGR) dues from major telecommunication companies to the government in return for their spectrum, the ball is in the government’s court — specifically, of the Department of Telecommunications (DoT). Overlooking the well-reasoned plea that the companies be given 20 years to pay their dues — after all, such tenors are not uncommon in infrastructure sectors — the court decided on a 10-year payment schedule again. That at least provides some respite for the debt-burdened players such as Bharti Airtel and Vodafone Idea. Some companies have interpreted the judgment to say that they now have till March 2022 to pay their first instalment, as at least 10 per cent of their “total dues” have already been paid to the government. But the DoT has reportedly sought legal opinion as to whether it should force companies to pay 10 per cent of their remaining dues this financial year.

It is important that the government should now take a step back and realise that forcing revenues out of cash-strapped companies in an infrastructure sector during a pandemic year is the worst possible strategy. It is short-sighted from the point of view of development; it is short-sighted from the point of view of consumer welfare; and it is short-sighted from the perspective of good fiscal management. The government must take a call — at the highest political level, alongside proper legislation, if necessary, to ensure there are no further legal issues — to protect the telecom sector while it undergoes the necessary churn, reorganisation, and a remaking of its business model that accompanies such crises as the economy is currently undergoing. The future of India’s economy will be largely digital. It is vital that enough healthy players survive this period of churn so that a consumer-focused and competitive sector develops. It is also essential that investors retain confidence in the sector, in order to ensure that capital continues to flow into it, given the scale of investment that will be needed to upgrade connectivity to the technological frontier.

This will require a complete change of attitude from the executive. The tendency to look at telecom spectrum solely as a source of revenue must be replaced with a more enlightened and broader outlook. It is not property to be rented out in service of the government; it is a public good, of which the government is the steward. Spectrum should thus be used as a prod to develop infrastructure and create consumer value and productivity improvement. Certainly, the over-dependence on telecom fees to pad out the numbers in the Union Budget must end — it has already led to the fiscal arithmetic being deemed less than credible by analysts, to the detriment of bond yields and broader confidence in the government. The time to take money out of the sector is when it is making profit, or specific companies or individuals are making windfall gains. It is not when the broader economy is in a crisis, and needs a working telecom sector just to survive. A far-sighted government with the national interest in mind would determine that sectoral health, not its own revenue, is the major priority at this moment.


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