DoT cuts expected revenue by 37% amidst ‘severe financial stress’ in sector

19 Jun 2017

India’s Department of Telecommunications (DoT) has asked the finance ministry to reduce revenue estimates from the telecoms sector for the financial year ending 31 March 2018 to INR295 billion (USD4.6 billion) from the previous figure of INR473 billion set out in February’s budget, the Economic Times reports. Projected turnover from licence fees and spectrum usage charges (SUC) fell to INR93 billion and INR170 billion, respectively, whilst the DoT is also anticipating no revenue from spectrum sales during the current fiscal year, due to the highly leveraged balance sheets of the nation’s operators. ‘In view of the severe financial stress in the sector and rapidly declining revenues of all major telecom service providers, revenue targets for DoT for budget estimates 2017-18 will actually require a downward revision,’ Member Finance Anuradha Mitra wrote in a letter to the secretary for economic affairs. The missive also highlighted the drop in licence fee and SUC revenue during the last three quarters of the 2016/2017 financial year, adding that ‘these trends of falling revenue will persist for some time.’ The official explained that intensifying competition had led to sharp drops in tariffs – with data tariffs being slashed by between 45% and 67% – which would not be adequately compensated for by a rise in traffic volumes.

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