MoF not to share licence fee with DoT

NEW DELHI, July 28: The Ministry of Finance (MoF) has shot down the Telecom Commission's proposal for retaining 25 per cent share out of th...

NEW DELHI, July 28: The Ministry of Finance (MoF) has shot down the Telecom Commission’s proposal for retaining 25 per cent share out of the revenues generated from the licence fees of telecom services including basic, cellular and other value added services. The Finance Ministry has stated that any share for the Department of Telecommunications (DoT) out of the revenue generated from licence fees would have to be considered on a case to case basis depending on the project for which the money is required.

In a recent communication to the DoT, the Finance Ministry has stated that there would be no

blanket permission for a regular sharing of the licence fees. It further states that any demands by the DoT could however be evaluated based on the needs for specific projects.

The MoF refusal is being considered surprising as the proposal had been originally okayed by the full Telecom Commission which consists of the Finance Secretary apart from other members like Secretary of the Industry Ministry, Department of Electronics, Planning Commission, DoT and other members of the Telecom Commission. The Finance Ministry has set a target of Rs 3,702.75 crore as the anticipated revenues from licence fees during the current year. Last year the Finance Ministry’s targets were belied as against a budget estimate of Rs 2,520.01 crore, licence fee realisation amounted to a mere Rs 1,587.50 crore which upset the budget calculations.

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This year, therefore, the Finance Ministry is anticipating to better its last year’s performance and has decided not to vote in favour of the Telecom Commission’s proposal.

The DoT, faced with competition from the private entrants in the field of basic and cellular services, had made this proposal on the grounds that they needed to upgrade their existing networks in order to satisfy the demands for interconnectivity between private networks and those of the DoT. Even the Planning Commission’s Working Group, headed by Member (Technical) of the DoT had endorsed this view and recommended a 25 per cent share of the licence fees be retained by the DoT. Under the present practice, the entire funds collected by the DoT on this account are forwarded to the Finance Ministry.

The DoT had been arguing that these funds could give them greater leverage for investing money in Research & Development activities, infrastructure development and development of switches manufactured by the Centre for Development of Telematics (C-DOT) using latest technology.