COAI budget demands: telecom fiscal reset now
With the Union Budget around the corner, the Cellular Operators Association of India (COAI) is asking for a structural fix to spectrum pricing, statutory levies, and GST that is designed to restore sector health and accelerate digital infrastructure build-out.
Treat telecom as horizontal digital infrastructure
Connectivity underpins growth in manufacturing, logistics, fintech, e-commerce, health, and public services—India’s own policy framing increasingly calls telecom a value-added horizontal. Treating it as such means aligning fiscal and regulatory levers to maximize network availability, performance, and affordability. That alignment is not yet complete. Operators still carry heavy legacy costs while rolling out 5G, fiber, and rural coverage, and the next wave—edge, AI-ready transport, and eventual 6G pilots—will require even tighter capital discipline.
Operator finances: capex pressure despite 5G progress
Reliance Jio and Bharti Airtel have moved fast on pan-India 5G RAN and core transitions, with fixed wireless access and premium 4G upgrades buoying ARPU. Vodafone Idea is working to stabilize and expand. But high spectrum carrying costs, cumulative levies, and GST-related working capital lock-ups persist. The result: capex must be sequenced, rural economics are tight, and enterprise 5G monetization must do more of the heavy lifting. COAI’s submission aims to free cash for coverage, capacity, and cloud-era services.
COAI’s three asks: spectrum, levies, GST
COAI’s agenda centers on spectrum affordability, regulatory levy rationalization, and GST reform to unlock liquidity frozen as input tax credit.
Lower spectrum costs to accelerate 5G and fiber
COAI wants a reassessment of reserve prices and the broader spectrum cost model. India has historically priced spectrum at the high end, dampening room for densification and new use cases. A market-aligned approach—especially for mid-band refarming, 6 GHz, and millimeter-wave—would expand capacity where traffic is surging and make nationwide fixed wireless and enterprise 5G economics pencil out. It would also better position India as 3GPP Release 18 features, network slicing, and RedCap scale up.
Cut levies: pause DBN, trim license fee to 0.5–1%
Operator earnings still face an 8% hit—5% to the Digital Bharat Nidhi (formerly USOF) and 3% as license fee. COAI argues for spending the sizable unused corpus first, holding the DBN levy in abeyance, and trimming license fees to roughly 0.5–1% to cover administrative costs. The logic is straightforward: direct more operating cash to fiberization, rural towers, and backhaul where the coverage and quality gap remains, while ensuring accountability for DBN-funded projects already sanctioned.
Reduce GST on spectrum and license fees to 5%
Thick layers of input tax credit have accumulated that operators cannot reasonably set off, locking up “thousands of crores” in government accounts. Cutting GST on regulatory payments from 18% to 5% would reduce the pace of new ITC build-up and meaningfully ease liquidity pressure. That improves debt serviceability, smooths capex pacing, and reduces the risk that non-core capital substitutes for critical radio and transport investments.
Telecom outlook 2025–2027: operators, vendors, enterprises
If the Budget addresses even part of COAI’s wishlist, the near-term impact would ripple across operators, vendors, and enterprise buyers.
Operators: faster coverage, capacity, SA core rollout
Lower carrying costs would let Jio, Airtel, and Vi bring forward rural 4G/5G sites, add mid-band capacity in urban hot spots, and accelerate migration to standalone cores where enterprise features (QoS slicing, ultralow latency) sit. Fixed wireless access could scale beyond early metros with better spectrum economics. Expect sharper prioritization of 6 GHz and mmWave plans if reserve prices move, alongside continued fiber-to-tower and fiber-to-premise build to lift backhaul headroom.
Vendors/hyperscalers: scale enterprise 5G and edge
More breathable operator capex and opex supports sustained radio refresh, transport upgrades, and cloud-native core rollout. That is good for Ericsson, Nokia, and ecosystem partners, including emerging Open RAN and vRAN deployments where power/performance economics justify. Hyperscalers and SI partners should anticipate more private 5G deals and MEC footprints in manufacturing, logistics, and video analytics, provided spectrum and levy costs fall enough to keep TCO compelling.
Enterprises: clearer TCO and more 5G options
Enterprises comparing Wi‑Fi 6/7, private 5G, and network slicing will get cleaner pricing signals if levies and GST fall. Watch for private 5G in priority bands, slicing on public networks as SA mats, and RedCap modules enabling sensors and wearables at lower cost. A friendlier fiscal backdrop should also speed use-cases in ports, mines, utilities, and smart campuses where reliability and deterministic latency matter.
Budget signals and policy execution to watch
The details will determine whether relief translates into durable sector economics and faster digital inclusion.
Key Budget signals: DBN, license fee, GST, spectrum prices
Look for an explicit drawdown roadmap for Digital Bharat Nidhi, a glide path to a 0.5–1% license fee, and a GST rate cut specific to spectrum and license payments. Spectrum reserve prices for upcoming bands—especially 6 GHz and additional mid-band—will be the clearest indicator of policy intent. Clarity on right-of-way, municipal fees, and power tariffs would further improve deployment velocity.
Execution risks: RoW, trenching, devices, litigation
State-level RoW approvals, fiber trenching delays, and device affordability can blunt national reforms. AGR-related litigation overhangs, if any, must stay contained. And while levy cuts improve cash flows, disciplined capex and monetization—FWA, premium 4G/5G, and enterprise services—will still decide returns. Robust governance for DBN-funded projects is essential to maintain rural momentum and public trust.
Strategy playbook for CFOs, CTOs, vendors, enterprises
CFOs should scenario-plan for two budgets: with and without full relief, aligning debt schedules and capex gates to either outcome. CTOs should lock migration plans for SA core, transport upgrades, and power optimization to monetize Release 18 features quickly. Vendors and hyperscalers should pre-package outcomes-based offers tied to productivity and uptime, not just bandwidth, to capture liberated operator spend. Enterprise buyers should ready pilot-to-production roadmaps for private 5G and MEC the moment price signals improve.
Bottom line: treating telecom as the economy’s horizontal demands a fiscal framework that rewards investment over rent. If the Budget moves on COAI’s asks—spectrum, levies, and GST—India can compress the time-to-benefit for 5G today and lay cleaner tracks for 6G tomorrow.
