The license fees paid by telecom operators in India to the central government fell by 23% to 2,663 crore in the three months ended March compared to the previous three months, the government said.
Compared to nine months earlier, the fall was 33%.
Telecom access providers, such as Bharti Airtel and Idea Cellular, have to pay a certain share of their service revenue — around 8% at present — as license fees to the government.
However, these players have seen a sharp decline in their revenue in recent months as consumers have started using their services sparingly to save money. Instead, many consumers have bought secondary connections from new entrant Reliance Jio and have shifted much of their usage to their new connections.
This has resulted in savings of tens of thousands of crores of rupees to consumers so far.
However, this has also meant that the money that the incumbent operators used to be able to generate from their business has gone down sharply. The revenue of Idea Cellular, for example, is estimated to have declined by about 15% due to the entry of Reliance Jio.
This has in turn affected the share of the government.
Under normal circumstances, this money would have come back to the government in the form of taxes and levies from Reliance Jio, the new operator. However, Jio was been providing its services free of charge in the three months ended March.
As a result, the government was not been able to recoup the lost telecom taxes in the form of a revenue share from Reliance Jio.
The new entrant has since begun charging for its services in a gradated fashion, starting in April.
It is expected to start charging fully for its voice and data services by early 2018, and the government is also likely to see a bounceback in its revenue at the time.
Moreover, some of the ‘lost tax’ would also return to the government in the form of taxes on other items, as consumers use the money they save on their telecom bill for purchasing or consuming other goods and services.
An ‘interministerial group’ of officials have recommended giving some relief to telecom companies in India to help restore their profits, which have been hit by the entry of Jio.