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Telecom operators in India are estimated to have spent an additional Rs 10,000 crore during the fiscal year 2022-23 to reportedly support the traffic generated by large entertainment and communication apps. This estimate comes from the Cellular Operators Association of India (COAI), the industry body representing telecom operators. COAI is the apex telecom industry body, its members include Reliance Jio, Airtel and Vodafone-Idea.
COAI’s Director General, SP Kochhar told news agency PTI that the infrastructure support provided by telecom operators to the top 4-5 large traffic generator apps also corresponds to their revenue growth. Not just this, in the absence of fair share norms for these large apps, the government, COAI said, has lost approximately Rs 800 crore in revenue in 2023 alone.
List of apps “causing revenue loss” to the govt and telecom companies
As per COAI’s white paper, telecom operators across the world have been demanding contributions from large traffic generator apps mainly Netflix, Amazon Prime, WhatsApp, Instagram, X etc to support the cost of network infrastructure.
The industry body submitted a white paper to the Ministry of Finance in January, highlighting the situation. Kochhar explained that the additional capital expenditure (capex) required to provide the necessary infrastructure for handling the large traffic generated by these apps amounts to around Rs 10,000 crore for the year 2023.
Had there been a proposed fair share arrangement with telecom service providers (TSPs) based on this amount, it would have resulted in enhancing the Adjusted Gross Revenue (AGR)-related license fees and Universal Service Obligation Fund (USOF) levies (which together constitute 8% of AGR or a portion of revenue used to compute the government’s share) to almost Rs 800 crore for the government. However, this additional revenue is not currently being received.
Indian telecom companies not the only one
Telecom operators worldwide have been advocating for contributions from large traffic generator apps, including platforms like Netflix, WhatsApp, Instagram, and others, to help cover the costs of network infrastructure.
COAI’s financial analysis reveals that the industry’s capex, which stood at Rs 46,532 crore in March 2021, increased to Rs 53,661 crore in March 2022 to accommodate the traffic generated by telecom operators at that time. However, starting from 2022, infrastructure spending saw a steeper growth, reaching Rs 73,922 crore in March 2023.
While the enhanced data traffic resulting from large traffic generators does contribute to the revenue of telecom operators, it remains insufficient to cover the substantial increase in infrastructure capex. Given the current consolidated subscriber base of 114.4 crore, the additional subscriber base of 50 crore appears unachievable. Consequently, infrastructure spending is likely to continue surpassing the earnings of TSPs over the years, as TSP Average Revenue Per User (ARPU) calculations consider revenue collections from voice, data, and SMS services across the entire subscriber base.
COAI’s Director General, SP Kochhar told news agency PTI that the infrastructure support provided by telecom operators to the top 4-5 large traffic generator apps also corresponds to their revenue growth. Not just this, in the absence of fair share norms for these large apps, the government, COAI said, has lost approximately Rs 800 crore in revenue in 2023 alone.
List of apps “causing revenue loss” to the govt and telecom companies
As per COAI’s white paper, telecom operators across the world have been demanding contributions from large traffic generator apps mainly Netflix, Amazon Prime, WhatsApp, Instagram, X etc to support the cost of network infrastructure.
The industry body submitted a white paper to the Ministry of Finance in January, highlighting the situation. Kochhar explained that the additional capital expenditure (capex) required to provide the necessary infrastructure for handling the large traffic generated by these apps amounts to around Rs 10,000 crore for the year 2023.
Had there been a proposed fair share arrangement with telecom service providers (TSPs) based on this amount, it would have resulted in enhancing the Adjusted Gross Revenue (AGR)-related license fees and Universal Service Obligation Fund (USOF) levies (which together constitute 8% of AGR or a portion of revenue used to compute the government’s share) to almost Rs 800 crore for the government. However, this additional revenue is not currently being received.
Indian telecom companies not the only one
Telecom operators worldwide have been advocating for contributions from large traffic generator apps, including platforms like Netflix, WhatsApp, Instagram, and others, to help cover the costs of network infrastructure.
COAI’s financial analysis reveals that the industry’s capex, which stood at Rs 46,532 crore in March 2021, increased to Rs 53,661 crore in March 2022 to accommodate the traffic generated by telecom operators at that time. However, starting from 2022, infrastructure spending saw a steeper growth, reaching Rs 73,922 crore in March 2023.
While the enhanced data traffic resulting from large traffic generators does contribute to the revenue of telecom operators, it remains insufficient to cover the substantial increase in infrastructure capex. Given the current consolidated subscriber base of 114.4 crore, the additional subscriber base of 50 crore appears unachievable. Consequently, infrastructure spending is likely to continue surpassing the earnings of TSPs over the years, as TSP Average Revenue Per User (ARPU) calculations consider revenue collections from voice, data, and SMS services across the entire subscriber base.
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