Indian telecom firms to pay arrears of $8 billion to the government

Known for their poor services to customers, the telecom service providers in India are embroiled in financial disputes with the federal government.

Over three dozen service providers have to pay arrears amounting to over $7 billion (47,776 crore rupees) to the government in the form of licence fees, spectrum charges and other dues but most of them have challenged the government's claims in various courts and as a result nearly $3 billion (17,000 crore rupees) is held up in litigations.

The state-owned Bharat Sanchar Nigam Limited (BSNL) is the largest debtor followed by Bharti Airtel, Vodafone, Idea Cellular, Aircel Limited, Reliance Communications Ltd, Mahanagar Telephone Nigam Ltd (MTNL), Tata Teleservices, and others. These telecom majors account for more than 90 percent of the dues to be paid to the government (see chart). Even MTNL is owned by the government and operates in Delhi.

Licence fee and spectrum charges arrears against major service providers:

(Other dues pertaining to EMR Penalty, CMF Penalty, EMR Testing and MNP testing are not shown in the chart. Source: Parliament of India.)

If these arrears are realised, it can boost the government's much-ambitious $30 billion "Digital India" programme which aims to provide public access to internet in the country in 500,000 villages through high-speed networks.

Indian Minister for Communication and Information Technology Ravi Shankar Prasad said that the cases were being defended vigorously in TDSAT, various high courts and in the Supreme Court, and action will be taken depending upon the judgments. "The demands were issued as per the terms and conditions of the license agreements to realise the revenues in time," he told Parliament a fortnight ago.

The minister further said that the government has collected around $28 billion (170,000 crore rupees) by way of license fee and spectrum usage charges from the date of commencement of revenue share regime until September 2015.

Centre for Telecom Management & Studies Director Dr T H Chowdary expressed doubts over the government's plan to collect these arrears as the majority of them were incurring losses. "The companies were given licences for 20 years and most of them did not earn any profits for 10 to 12 years. The state-owned entities -- BSNL and MTNL -- have been in losses and the government has no option but to write off their dues," Dr Chowdary told ZDNet.

Dr Chowdary, who was member of Prime Minister's Task Force on IT and Software in the late 1990s, also opined that there was no need for these companies to pay spectrum charges as they have purchased spectrum.

"It is like buying a house and still someone asking them to pay rent," Dr Chowdary added.

The telecom companies refused to comment on the issue saying that the matter was sub judice but the Association of Unified Telecom Service Providers of India (AUSPI) Secretary General Ashok Sud said that challenging the government's claims was common in the telecom industry. "If the operators feel that the demands are not viable, they can contest them in the courts and the companies will honour the verdict," he added.