The Telecom Regulatory Authority of India (TRAI) on Monday issued recommendations on “Licence fee and policy matters of DTH services” which require DTH licensees to pay an annual licence fee equivalent to three per cent of adjusted gross revenue (AGR) which is to be brought down to zero fee in the next three years.
“DTH licensees should not be charged any licence fee after the end of the financial year 2026-27. The licensee should submit an initial bank guarantee from any scheduled bank to the Ministry of Broadcasting (MIB) for ₹5 crore for the first two quarters. Thereafter, the licensee should submit a bank guarantee (BG) from any scheduled bank to the MIB for an amount equivalent to the Initial BG (i.e., ₹5 crore) or 20 per cent of the estimated sum payable, equivalent to License Fee for two quarters and other dues not otherwise securitized, whichever is higher,” TRAI said.
Once the licence fee becomes zero, the licensee should submit a BG (performance bank guarantee) for a fixed amount equivalent to the initial BG (i.e., ₹5 crore) from any scheduled bank to the Ministry, which should be valid for a minimum of one year and renewed every year to ensure it remains valid for the entire currency of the licence agreement, the regulator said.
It recommended that the licensor should also be at the liberty to encash the BG in full or part in the event of violation of any of the licence condition.
“Electronic bank guarantee should be encouraged and permitted for ease of doing business. These recommendations including the definition of gross revenue (GR), applicable gross revenue (ApGR), Adjusted Gross Revenue (AGR) and the percentage of AGR to calculate the licence fee for the DTH liçence may be made applicable ‘prospectively’,” TRAI said.
DTH operations in India are governed by the policy guidelines for obtaining licence for providing DTH broadcasting services in India. These guidelines prescribe a license fee (LF) and LF is a non-tax fee levied on a service provider against the privilege of being permitted to carry out a licensed activity.
As per the provisions of the guidelines, the DTH operators are required to pay a LF, which is 8 per cent of AGR on a quarterly basis to MIB.
TRAI recommendations said gross revenue (GR) should comprise revenue accruing to the licenced entity by way of all operations/ activities and inclusive of all other revenue — income on account of interest, dividend, rent, profit on sale of fixed assets, miscellaneous income, etc, without any set-off for related items of expense.
The recommendations provided certain explanations with the definition. For instance, applicable gross revenue (ApGR) for arriving at the revenue calculations for licence fee should be equal to the total GR of the licensee as reduced by items including – revenue from activities under a licence/permission issued by Department of Telecommunication); reimbursement, if any, from the government; and list of other income to be excluded from GR to arrive at AGR (income from dividend, Interest, Income from sale of fixed assets and securities; gains from foreign exchange rates fluctuations; Income from property rent; insurance claims; bad debts recovered and; excess provisions written back).
Based on the MIB’s reference, a consultation paper on “licence fee and policy matters of DTH services” was issued by TRAI on January 13 this year. Written comments and counter-comments on the consultation paper were invited from the stakeholders by February 27 and March 13, respectively. TRAI received seven comments and one counter-comment from various stakeholders.
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Published on August 21, 2023
