GSMA, which represents the interests of mobile operators worldwide, urged India to modernise its regulatory framework for the telecom industry and simplify taxation besides adopting a “whole of government” approach to bring profitability back to the stressed sector and attract foreign investments.
The London-based telecom body said that India is facing a strong competition within the region and other markets are more attractive in terms of providing investor comfort backed by a strong regulatory framework.
GSMA Asia Pacific head Julian Gorman said that issues related to AGR and taxation along with falling industry revenue and profits have impacted the investor confidence in India. “…uncertainties around resolving those issues have not been enough to attract foreign investment into India’s telco space.”
“There is quite a high tech complexity of tax burden in India, which can be simplified. And in adopting the full whole of government approach if Digital India is the ultimate goal, making sure that the whole government is working together to ensure they achieve that vision,” Gorman was quoted as saying by the Economic Times.
GSMA’s Asia Pacific head’s comments come at a time when one of India’s major telcos –Vodafone Idea — is staring at an uncertain future because of various legal challenges, including the hefty AGR dues which it needs to clear in 10 years.
Gorman said that the AGR definition should be simplified in the country
The cash strapped telco’s parent, Vodafone Group Plc, recently won a long-pending arbitration case against the Indian government relating to retrospective taxation. However, India is planning to challenge the Permanent Court of Arbitration award, which quashed the country’s income tax department’s demand of $2.97 billion as tax, penalty and interest on the Group.
GSMA expressed concerns over the financial sustainability of the Indian telecom sector and telcos’ dwindling capital expenditure.
“…we are seeing reductions in CAPEX and that’s not a great sign…some of the operators really not being in the position to make the big investments that are required to roll out a new generation of technology,” Gorman said.
As per GSMA estimates’, revenues for Indian telcos have plunged 25% since 2016.
Reliance Jio is the only Indian telco which is posting profits. This year’s July-September quarter was its 12th profitable quarter in a row at $384.32 million. India’s no. 2 telco, Airtel, saw its sixth straight quarterly loss in the second quarter at $103.11 million, while Vodafone Idea’s net loss stood at $973.38 million.
GSMA recently urged India to reduce license fee from 8% to 3% by abolishing the 5% USO (Universal Service Obligation) Levy. It also sought removal of Goods and Services Tax on regulatory levies and spectrum payment should be removed.
Gorman said that the Indian government needs to resolve issues around Right of way (RoW), allocation of more backhaul spectrum and 4G and 5G spectrum prices.
The executive also said that Indian telecom operators need to look beyond vanilla connectivity offerings by working on digital technologies.
“…there still is a lot of work to be done on modernizing the regulatory framework in India to support that Digital India vision and allow companies like Vodafone Idea and Airtel to do some more transformation and be able to take more steps in the direction of digital like Jio [Platforms] has done,” he added.
Jio Platforms raised $20.55 billion from 13 global investors, including Facebook and Google.