Direct To Home players seek further reduction in licence fee

Thakur

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Direct To Home (DTH) service providers have
sought further reduction in licence fee to
make their operations viable even as most of
them have found the recent Telecom
Regulatory Authority of India’s (TRAI)
recommendations favourable.
AGR calculation
Most DTH players said they would want their
licence fee to be brought down to around 5
per cent of their adjusted gross revenue (AGR)
as compared to 10 per cent of gross revenue
(GR), which they are paying now. In July, TRAI,
among others, had recommended reduction in
existing licence fee to 8 per cent of their AGR.
AGR is calculated after reduction of interest
and dividend income and earnings from any
other bundling of services.
“We want the licence fee to be brought down
to below 5 per cent of AGR. Telecom
spectrum is a scarce commodity but DTH
spectrum is available in abundance. This can
support 100 players. Why to charge anything
for a commodity that is available in
abundance? This is just like pricing water in
India on a par with petrol. Eight per cent
licence fee is too high,” said Videocon Group
Chairman Venugopal N. Dhoot. Videocon
provides DTH service under the Videocon d2h
brand.
Content cost
“Content cost must be excluded from AGR.
Either it should be moved or else the licence
fee be brought down to 6 per cent of AGR.
Our fight for exclusion of content cost is not
over yet. We will approach the Ministry of
Information and Broadcasting to press for
content cost to be excluded,” said R. C.
Venkateish, CEO, Dish TV, and President, DTH
Operators Association of India. Dish TV is a
part of the Zee Group.
“We welcome TRAI move on the overall
reduction of the licence fee. However, we are
disappointed with the quantum of the relief.
We also strongly feel that content costs
should be allowed as a deduction in the
computation of AGR which is consistent with
TRAI’s previous view and also upheld by
TDSAT in its judgment on DTH AGR. As an
alternative, the regulator should consider a
further reduction to 6 per cent,” said S. L.
Narayanan, Group CFO, Sun Group, which
offers DTH service under the Sun Direct brand
name. “On cross holding, our view is that
there should be no restrictions in a highly
competitive landscape,” Mr. Narayanan added.
“The recommendations are a welcome move.
From long we have been asking for clarity on
the longevity of the business and
rationalization of taxation. The
recommendations have addressed both. In its
recommendations, TRAI has addressed the
longevity issue by allowing incumbent players
to migrate to the new structure and the 20
years licence gives us longevity and clarity
that this business will continue,” said Harit
Nagpal, Managing Director & CEO, Tata Sky.
He said earlier there was no clarity. With
millions of subscribers and huge investment
the players had no clue whether their licence
would be renewed causing anxiety. “With the
proposed changes the longevity of the
business is crystal clear,” he said.
Rational move
Mr. Nagpal said the industry had been paying
10 per cent tax on GR for many years, and it
was implemented when there was no other tax
imposed on the sector. “Today, apart from 10
per cent tax on GR, the government levies
12.7 per cent of service tax and State
governments levy entertainment tax. All put
together the DTH industry pays 33 per cent of
its revenue as taxes. So, we have been
advocating on reduction on licence fee. Now
the licence fee is being actually brought down
to 7.2 per cent (8 per cent of AGR), so we
have got a relief of 2.8 per cent which is a
welcome and rational move,” he said.
Airtel Digital TV did not respond to The
Hindu’s query.
Though digitization in the two phases has
helped, the industry is yet to make money.
The third and fourth phase of digitations
would help, industry players said. http://m.thehindu.com/business/Industry/direct-to-home-players-seek-further-reduction-in-licence-fee/article6299308.ece/
 
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