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GOVERNMENT OF INDIA
MINISTRY OF COMMUNICATIONS
LOK SABHA
UNSTARRED QUESTION NO: 4563
ANSWERED ON:  29.03.2017
Revenue Loss due to Tariff War
Adhikari Dibyendu
G. HARI
UDIT RAJ
M. K. RAGHAVAN
M. B. RAJESH
NAGARAJAN P.
MIDHUN REDDY
Will the Minister of



COMMUNICATIONS be pleased to state:-


(a) whether the Government has taken cognizance of the reported downward trend in revenue accrued to the Government due to the alleged tariff war among the Telecom Service Providers (TSPs) triggered by free promotional offers by a new TSP;

(b) if so, the details thereof including the revenue accrued to the Government during each of the last three years, TSP-wise along with the steps taken by the Government to ensure a level playing field in the telecom sector;

(c) whether the promotional offers/tariffs of TSPs are governed by any guidelines/regulations and if so, the details thereof;

(d) whether the Government proposes to revisit the said guidelines/regulations along with the licensing framework and if so, the details thereof along with the time by which the said guidelines/regulations/frameworks are likely to be reviewed and if not, the reasons therefor;

(e) whether the BSNL and MTNL have incurred losses in recent years and if so, the details thereof including the operational profit/losses registered by the BSNL and MTNL during the said period and the reasons therefor; and

(f) the steps taken by the Government in this regard?


ANSWER
THE MINISTER OF STATE (IC) OF THE MINISTRY OF COMMUNICATIONS &
MINISTER OF STATE IN THE MINISTRY OF RAILWAYS
(SHRI MANOJ SINHA)

(a) Yes Madam. The revenue generation during the first three quarters of 2016-17 is as under:
(Rs. in Cr)
<pre>

Quarter1 Quarter 2 Quarter 3 Total
Licence Fee 3975.67 3584.04 3450.13 11009.84
Spectrum usage charges 1995.2 1820.03 1553.17 5368.4
</pre>


(b) The details of revenue accrued to the Government during the last three years (Telecom Service Providers (TSP)-wise) is given in Annexure I and Annexure I A. The Licence Fee and Spectrum usage charges (SUC) is charged as a percentage of Adjusted Gross Revenue from all Access Service providers at same rate.

(c) &( d) TRAI prescribes tariff for services in India. At present, these are under forbearance for mobile services. Through an advisory issued on 19.06.2002, TRAI asked all telecom service providers to restrict the validity of promotional packages and/or the benefits offered to customers under such packages on offer to a maximum of 90 days from the date of launch. Also, the Authority issued a Direction dated 01.09.2008 to all Access Service Providers regarding transparency in tariff offers, inter alia requiring the service providers that while publishing their promotional offers to the public, operators should specify:

(i) The eligibility criteria for such promotional offer; and
(ii) The opening and closing dates of such promotional offer (within the existing limit of ninety days).
TRAI issued a consultation paper on ‘Regulatory Principles of Tariff Assessment’ on 17.02.2017 for comments of the stakeholders. Last dates of submission of comments and counter-comments are 07.04.2017 and 15.04.2017 respectively. After receiving and analyzing of the comments, the Authority may decide to review the guidelines/regulation of tariff assessment.
(e) The information regarding net loss of revenue of BSNL and MTNL is given in Annexure -II. The reason for losses are as under:
BSNL:
During the year 2013-14, 2014-15 and 2015-16 the growth in revenue is marginal as BSNL had to offer lower tariffs to face competition. Further, there is increase in operating expenses as BSNL has to maintain Telecommunication Network and offer services in non- remunerative areas.
MTNL:
MTNL made book profit of 7825.13 crores during FY 2013-14. The same was on account of reversal of provisions of pensionary benefits following GOI decision for payment of the pension from its own sources and also the reversal of amortization charged earlier for one time BWA spectrum due to refund of BWA Spectrum by MTNL. During the years 2014-15 and 2015-16 the company incurred losses basically due to huge legacy staff cost on account of absorption of entire working employees in group B,C and D. In these years the staff cost was around 70-80% of total revenue and therefore the losses are due to excessive staff cost which is otherwise 5-6% of revenue on average in case of other operators.
(f) The steps taken are as given in Annexure III.q

Annexure - I
Operator wise License Fee Collections
(Rs. in Cr)
<pre>
Sl. No. Name of the Companies 2013-14 2014-15 2015-16
1 Aircel Ltd. 292.08 336.74 350.58
2 Bharti Group of Companies 2860.99 3260.04 3721.53
3 BPL Mobile Communications Ltd. 32.04 0.00 0.00
4 BSNL 1919.76 123.95 101.62
5 Dishnet Wireless Ltd. 218.42 264.10 286.54
6 Idea Cellular Ltd. 1467.26 1730.89 2094.19
7 Quadrant Televentures Ltd. 9.23 8.07 6.69
8 MTNL 164.93 0.00 0.00
9 Reliance Group of Companies 695.66 605.77 526.07
10 Reliance Jio Infocom Limited 0.00 0.58 5.80
11 Sistema Shyam Teleservices Ltd. 75.52 91.46 104.84
12 Spice Communications Ltd. 157.89 184.20 227.54
13 Tata Group of Companies 756.34 805.42 834.72
14 Telenor India Communications Private Limited 53.61 104.78 226.22
15 Unitech Wireless East Pvt Ltd. 126.53 91.99 39.86
16 Videocon Telecommunications Ltd. 10.61 13.52 9.92
17 Vodafone Group of Companies 2125.01 2414.89 2676.45
18 Other Services 3708.94 2491.79 2112.59
Total 14674.82 12528.19 13325.16
</pre>

Annexure I-A
<pre>
TSP wise Spectrum Usage Charges (CDMA+GSM+BWA) collection
(Rs. In Cr)
(CDMA+GSM+BWA)
Telecom Service Proivder FY 2013-14 FY 2014-15 FY 2015-16
Aircel Ltd 190.44 213.45 215.27
BSNL 490.72 492.59 278.88
Bharti Airtel Ltd 1878.17 2088.57 2300.50
Bharti Hexacom Ltd 138.47 163.66 192.07
BPL Mobille Communication Ltd.& Loop Telecom 45.03 0.00 0.00
Dishnet Wireless Ltd 95.66 120.87 135.70
HFCL Infotel Ltd 2.88 2.65 1.63
Idea Cellular Ltd 722.11 848.20 1037.41
Idea Mobile Communications Ltd 244.28 289.71 314.73
MTNL 62.56 0.00 0.00
Reliable Internet Sves Ltd 9.74 8.07 5.00
Reliance communications Ltd 190.95 67.95 126.27
Reliance Jio Infocom Limited 0.00 99.36 48.36
Reliance Telecom Ltd 118.36 104.51 94.37
S. Tel 0.27 0.00 0.00
Sistema Shyam Teleservices Ltd 28.72 37.22 41.48
Spice Communications Ltd 98.27 113.68 146.52
Tata Teleservices Ltd 252.21 253.29 262.10
Tata Teleservices Maharashtra Limited 93.89 77.91 89.39
Unitech/Telewings Communications Services Private Limited 76.95 127.15 151.18
Videocon Telecommunications Ltd 8.15 7.33 11.83
Vodafone 1488.84 1715.10 1789.23
Total 6236.68 6831.26 7241.93
</pre>

Annexure II
BSNL
(Rs. in Cr)
<pre>
Sl.No. Particular 2013-14 2014-15 2015-16
1 EBITDA (691) 672 3854
2 Net Profit /(Loss) (7,019) (8,234) (3,880)
</pre>
MTNL
(Rs. in Cr)
<pre>
Profit/ (Net Loss) Operating Losses (EBIT)
2013-14 7825.13 (1908.47)
2014-15 (2893.39) (1453.77)
2015-16 (2005.74) (1201.29)
</pre>






Annexure III
Steps taken by BSNL:
• Mobile equipment is being procured/upgraded progressively for improvement and capacity augmentation in BSNL’s Network GSM Phase VII+ project is under roll out.
• Competitive tariff is being offered to its customers keeping in view the existing market conditions.

Steps taken by MTNL:
• Expansion of GSM / 3G RF network in Delhi: MTNL is in the process of expansion of mobile network by adding 1080 number of 3G sites for higher Data handling capacity. Purchase order of Rs 295 Cr. has been placed on 18.06.2016 for adding 1080 number of 3G sites in Delhi.

• 3G Network Up-Gradation in Delhi: APO for Rs. 48 Cr. has been placed for upgradation of existing 720 3G Node Bs for HSPA+ capability.

• 3G Network Up-Gradation in Mumbai: MTNL has also planned to upgrade the existing 3G network in Mumbai to make it a high speed network of ‘HSPA+ version’. Purchase Order of Rs 28 Cr has been placed on 28.10.15 for Mumbai.

• Microwave Backhaul Connectivity: Purchase order for adding 800 Microwave Hops in Delhi and 470 in Mumbai are already placed for amounts of Rs 18.26 Cr. for Delhi and 10.9 Cr. in Mumbai. Purchase order for upgradation of existing 754 Microwave Hops in Delhi are placed on 18.02.17 for amounts of Rs. 17.74 Cr.

• After the proposed up-gradation, the customers will get a downlink speed of 21.1 Mbps & uplink speed of 5.76 Mbps which is presently of 3.6 Mbps & 384 Kbps respectively.

• Redeployment of DSLAMs of existing Broadband Network: MTNL has launched a special program to progressively increase the fibre length by redeploying the broadband nodes (DSLAMS) near to the subscriber premises in Delhi and Mumbai thereby reducing copper length and enhancing the quality of broadband service. 148 DSLAMs in Delhi & approx 140 in Mumbai have been redeployed thereby reducing copper length and enhancing the quality of Broadband service. This has improved customer experience and reduced the number of complaints.

• Fibre to the Home (FTTH): High speed Broadband connections on optical fibre are proposed to be added on revenue share basis in Delhi & Mumbai. The customer will be provided data speeds up to 100Mbps on optical fibre.


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