TRAI releases recommendations on DTH services license fee and policies: Key points to know

The Telecom Regulatory Authority of India (TRAI) has released its recommendations on ‘License Fee and Policy Matters of DTH Services.’ These recommendations were sought by the Ministry of Information and Broadcasting (MIB) under Section (11) (1)(a) of the TRAI Act, 1997, as per a letter dated 02.02.2022.

TRAI had issued a consultation paper on the subject on 13th January 2023, inviting stakeholders to submit written comments and counter-comments. During this period, the authority received a total of seven comments and 1one counter-comment from various stakeholders.

The salient features of the recommendations to start with includes, that gross revenue (GR) shall comprise revenue accruing to the licensed 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 also provided certain explanations with the definition.

It also says that applicable gross revenue (ApGR) for arriving at the revenue calculations for license fee should be equal to the total GR of the licensee as reduced by the following items-revenue from activities under a license/permission issued by DoT; reimbursement, if any, from the Government; and list of other income to be excluded from GR to arrive at AGR.

Adjusted gross revenue (AGR) as per the recommendation is calculated by excluding GST paid to the Government from the ApGR, if ApGR had included as component of GST.

Additionally, MIB should revise the Form-D (the Statement of Revenue and Licence Fee for DTH Licensees) and adopt the format of Form-D as prescribed in the recommendations. The process for the submission of Form-D should be made end-to-end online with facility to upload all the related documents in digital mode via single window system. Some of the other key features of the recommendations include that MIB should develop a robust mechanism for deduction verification process through single window portal. Then there one that said DTH Licensee should pay an annual license fee equivalent to 3 percent of AGR.

License fee for DTH Licensees should be brought down to zero in next three years. DTH Licensees should not be charged any license fee after the end of the financial year 2026-2027.

The licensee should submit an initial bank guarantee from any scheduled bank to the MIB for an amount of Rs 5 crore for the first two quarters. Thereafter, as per the recommendation the licensee should submit a bank guarantee (covering financial and performance bank guarantee) from any scheduled bank to the MIB for an amount equivalent to the initial bank guarantee or 20% of the estimated sum payable, equivalent to license fee for two quarters and other dues not otherwise securitized, whichever is higher.

Once the license fee becomes zero, the licensee should submit a bank guarantee for a fixed amount equivalent to the initial Bank Guarantee from any scheduled bank to the MIB, 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 license agreement.

The licensor should be at the liberty to encash the Bank Guarantee in full or part in the event of violation of any of the license condition.

Electronic Bank Guarantee should be encouraged and permitted for ease of doing business.

Lastly, as per the media statement about the recommendations, 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 License Fee for the DTH License may be made applicable 'prospectively'.