Telecom taxed like tobacco industry, says Airtel chairman Sunil Mittal

NEW DELHI: Telecom czar Sunil Bharti Mittal on Thursday mentioned consolidation in Indian telecom sector has come about at "significant pain" of nearly $50 billion of funding write-off and activity losses, and went on to flag top taxes that the field faces.

Speaking at the inaugural session of India Mobile Congress 2018, Mittal who is the chairman of telecom primary Bharti Airtel, rued that the telecom sector remains highly taxed identical to the tobacco business, when it is contributing to India's digital aspirations.

"In India, for every Rs 190 that mobile operators earn, nearly Rs 37 goes towards one form of levy or the other. I cannot see how this contradiction can exist...where on one hand we have PM's vision of digitally enabled India ...which requires tremendous amount of investment, on the other hand we keep the spectrum prices and our licence fee very high...and of course the GST is at 18 per cent which almost at the highest tax bracket," Mittal mentioned.

This needs to be resolved, Mittal mentioned, including he's glad that the National Digital Communications Policy (NDCP) captures the outstanding problems like doing away of twin taxation, accelerating merger and acquisition process, and lowering litigation within the sector.

He additionally mentioned the business has now reached the "right structure" however famous that the consolidation of the Indian telecom market did not take place in an orderly approach excluding in case of Vodafone Idea merger.

"Many operators had to go through significant amount of pain and job losses, nearly 50 billion dollars has been written off and now we have arrived to a point where we are in the right industry structure," Mittal mentioned.

He mentioned telecom markets globally are moving against having 2-3 operators and added that in India, too, consolidation had prepared the ground for 3 non-public gamers and one state operator to cover over 1.2 billion folks.

"As all of you are aware, the mobile industry is a heavy capital intensive industry, which requires continuous change of technology, requires laying of fibres, putting towers, so that we can reach the customer," he mentioned.

Mittal mentioned that the National Digital Communications Policy, like the former telecom policy, clearly acknowledges that earnings maximisation is not the objective.

"There is an overarching objective of the earlier national telecom policy and now also enshrined in the NDCP that revenue maximisation is not the objective. Then the question is why the industry and Department of Telecom are in hundreds of litigations around only one objective of revenue maximisation," Mittal mentioned.

The business is gearing up for 5G roll out and can "deliver" results simply as it has over the last 24 years, Mittal mentioned, however added that spectrum costs and costs need to be cheap and affordable, and incidence of top taxation needs to be addressed.

It is pertinent to say that established operators like Bharti Airtel, Vodafone Idea Ltd are in the midst of a bruising tariff warfare following the access of Reliance Jio, subsidized by way of India's richest businessman Mukesh Ambani. Jio's unfastened voice and dirt-cheap data providing have dented the financial metrics of incumbent operators, deepening the have an effect on of regulatory choices like reduce in termination fees, even though the market is growing at a scorching pace.

Mittal mentioned that over the last twelve months India has embraced technology with each arms.

"Today, we have over 450 million mobile net users and are increasingly adding millions of them almost on weekly basis," he pointed out.

India, he noticed, has additionally been in a position to draw production within the telecom sector and lots of mobile handset gamers have set up production base within the nation.

"India still needs to ensure that we have fundamental manufacturing shifting to India with more chip set manufacturers, more components makers coming here and that is something which normally follows when the local production starts," he added.
Telecom taxed like tobacco industry, says Airtel chairman Sunil Mittal Telecom taxed like tobacco industry, says Airtel chairman Sunil Mittal Reviewed by Kailash on October 25, 2018 Rating: 5
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