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Taxes absorb 58% of the income of the telecommunications companies in the nation with the lowest rate: CEO of Voda-Idea

As well as being hit by one of the highest visible levies in the world, Indian telcos have a huge hidden cost as 58 per cent of their revenue is subject to government tax, Vodafone Idea CEO Akshaya said. Moondra. Arguing that the industry needs to quickly make massive capital investments for technology migration, he said the burden on the telecom sector needs to be quickly reduced.

“We have 18% GST and 12% license fees and charges for spectrum use. This 30% is very visible to everyone. What is not very visible is that the price of spectrum, if it becomes a annuity value and is calculated as a percentage of revenue, adds another 28 per cent of industry revenue (as cost),” Moondra said while speaking to the conclave of CEOs at the sixth Mobile India Congress.

“So if you take the industry revenue of Rs 231 crore and calculate the total value of spectrum delivered, which is close to Rs six trillion today, the annuity value of that payment comes to 28 per cent. of revenue, in addition to visible costs. So 58 percent of revenue is reflected in government levies in a country where rates are the lowest,” he explained.

Moondra said the operating cash generation of telcos can be freed up for investment if the government reduces the tax burden.

“With every technology transition, especially from 4G to 5G, the data being carried by networks is massive. This data cannot be carried wirelessly, you need fiber to carry it. Unfortunately, right-of-way regulations in the country have been “Very difficult. The government has taken some steps to rectify that. But if 5G is going to be successful in India, it’s very important that this right-of-way mess that exists today is resolved,” he added.

New opportunities

Moondra said that 5G brings features such as low latency, ultra-low latency, mass machine-like communication, and the ability to split networks.

“This will help automate manufacturing in a way that was not possible before. Over the next 2-3 years, manufacturing, including the Internet of Things, will be one of the main drivers of technology being deployed to improve society. … and to improve efficiency and productivity,” he added.

Latency specifies the end-to-end communication delay, measuring the time between the sending of certain information and the corresponding response. 5G can be exploited to reduce network latency. Latency can be identified in the time interval between the moment a “stop” button is clicked and the moment a remotely driven vehicle actually begins to brake. Experts say that reducing the latency experienced by end users from hundredths of a second to a few milliseconds can have an unexpected impact and lead to a true digital revolution.

Madhusudhan Mysore, CEO and CEO of Tata Communications Transformation Services (TCTS), said the massive level of investment expected in 5G is supported by a number of established use cases. “It could be a consumer or industry use case. But the business implications are huge. The buyer will be the strategic person. (5G) is no longer just a technology or IT infrastructure conversation. It’s becoming part of the meeting room.” business strategy,” he said.

“4G deployment has grown from nine percent in 2016 to 68 percent now. That’s phenomenal, with a 15x growth in data consumption. Indians consume 15 exabytes of data every month,” Salil Raje, SVP Data Center & Communications Group at US multinational semiconductor maker AMD said. One exabyte is equal to one billion gigabytes.

He said that India needs to gather more talent in the hardware processing sector if it wants to expand sustainably and grow its exports from the sectors. “At AMD we have 6,000 to 7,000 engineers in India, but we need to bring in a lot more talent,” Raje said.

“We need to start thinking about private 5G, which is extremely important in the areas of education and healthcare. Because it can quickly impact all these businesses and show the real value of 5G. Private 5G refers to managed services to deploy, operate, and scale private cellular networks on premises with integrated hardware and software.

However, some business leaders said that newer networks that are programmable to use new opportunities to monetize 5G are the need of the hour. “People say that 5G represents big investments, but ARPU goes south, while CAPEX goes north. We need these curves to go in the opposite direction,” Puneet Sethi , senior and general vice president said the manager of the American telecommunications software company Mavenir.

Billed as Asia’s largest telecommunications, media and technology forum, the four-day Mobile India Congress is co-hosted by the Department of Telecommunications (DoT) and the Cellular Operators Association of India (COAI).


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