Govt expects near 27% fall in revenue from telecom sector in FY23; FY22 revenue well above Budget estimates

The government expects nearly a 27% on-year fall in revenue from the telecom sector at Rs 52,806.36 crore in FY23 against the Rs 71,959.24 crore it earned in the current fiscal year to March 31, according to budget documents.

This is despite FM Nirmala Sitharaman announcing during her Budget speech on Tuesday that the 5G spectrum auction will happen in calendar 2022 with a targeted rollout of 5G mobile broadband services in FY23.

The estimated fall in revenue mop-up in FY23 comes after the government’s takings in FY22 at nearly Rs 71,960 crore, were much higher than the Rs 53,986.72 crore it had originally expected to earn.

An analyst at a top global brokerage said “the higher takings in the current fiscal is due to the recent significant advance payments by Reliance Jio and Bharti Airtel towards past spectrum auctions”.

Last month, Jio paid Rs 30,791 crore clearing all dues towards spectrum bought in auctions before March 2021. Prior to that, in October 2021, it had paid an additional Rs 10,792 crore, while Airtel had made an advance payment of Rs 15,519 crore to clear all dues relating to spectrum bought in the 2014 sale.

Industry experts said the Rs 52,806.36 crore telecom revenue estimate for FY23 appears to be factoring in only a modest upfront payment component from the upcoming 5G spectrum sale likely around April-May.

“The 5G spectrum auction will be conducted in 2022 to facilitate the rollout of 5G mobile services within 2022-23 by private telecom operators, the FM said during her budget presentation.

The Trai has already started the process of setting base prices of nine new spectrum bands, plus the mid-band airwaves, earmarked by the government for 5G services -- including the 600 Mhz and the coveted millimetre wave bands -- for the upcoming spectrum sale.

The government’s revenues from the telecom sector mainly come in the form of licence fees and spectrum usage charges (SUC) from telcos, which are computed based on the AGR of telcos. Telcos annually pay 8% of their AGR as licence fees, and around 4% towards SUC to the government.

Over the years, spectrum sales through auctions have been a major contributor to government revenue. DoT is yet to specify the exact timing of the 5G spectrum sale though it is widely expected to happen this year.