Hyderabad: Already suffering from huge stress due to bad loans and price wars, the telecom sector will suffer further once the new indirect tax regime kicks in from July 1, according to COAI director-general Ranjan S. Mathews.
When asked about how the telecom sector, which will now have to cough up 18 per cent in taxes, plans to deal with the latest challenge, Mr Mathews said, “There is no question that the industry, in general, is stressed financially and this happened even before Jio came in.”
“There is going to be two paths. Going from 15 per cent to 18 per cent, what you’ll see is either the operators absorb that; in which case it exacerbates the financial condition. Or, it gets passed on to the customers to bear the brunt of it and it offsets the demand. Both instances are not good for the industry.”
Mr Mathews, who was in the city for an event, also urged the government to remove the spectrum usage charges as a solution to deal with the stressed loans, “What could have been done otherwise is to stop collecting SUC, which ranges from 11 to 14 per cent in addition to an upfront payment. The fact that the government continued to take both was a part of the challenge that caused the financial stress.”
