To eliminate certain categories of revenue stream such as income from the sale of handsets, OTT subscription, capital receipts, mobile advertising services, etc., that they feel do not flow from their licensed telecom services, the telecom industry refined the definition of adjusted gross revenue (AGR).
While calculating the AGR for paying Spectrum Usage Charge (SUC), the revenue generated from services that do not require spectrums such as wireline service, leased circuits, bandwidth charges, port charges, and infrastructure sharing charges, be not taken into account. The industry wrote this to the Department of Telecommunications (DoT).
On September 15, the government redefined AGR. As a result, a new definition Applicable Gross Revenue (ApGR) has been entitled. 8% of their AGR are paid as license fees by operators and 3-5% of their AGR as spectrum usage charge.
Interest income like advance rentals, earned from customers’ refundable security deposits is still a part of ApGR. The telecom operators emphasized in a letter to the DoT through its industry body, Cellular Operators Association of India (COAI) that it is not possible to segregate the interest earned from such activities. This may lead to another round of disputes in the future.
The list of other income that has been reduced from gross revenue to arrive at ApGR is not comprehensive and many items of other income which not linked to the provision of telecom services have been excluded to conform to the decision of the Union Cabinet.
The operators feel that many revenue streams that appear to be ancillary or incidental to services will be included in AGR as the DoT has not defined the telecom activities.
The format of AGR has been designed circle/licence wise. The whole non-telecom revenues are first allocated to these circle/ licences against the gross revenue and then exclusion of these items.
There is a need for double working to arrive at the ApGR. The ApGR should be shown with the circle/licences if single gross revenue and ApGR should be prepared for the company. This was said by the COAI.
The industry urged that all charges paid to other telecommunication service providers should be allowed as a deduction for all services.
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