DoT projects Rs 3,000 crore loss

BANGALORE: The Department of Telecommunication (DoT) has estimated a revenue
loss of up to Rs 3,000 crore during the current financial year due to the
implementation of cost-based tariff for telecom services announced in May last
year by the Telecom Regulatory Authority of India (TRAI).

DoT has retained old tariff for low users and implemented new tariffs for the
high-end users. However, the concept of raising local charges and reducing long
distance call charges did not result in increase in usage, sources said. Though
the trend of declining revenues was observed across the country, some of the
circles witness very sharp decline resulting in a loss of more than Rs 2,900
crore in 1999-2000. This was likely to affect the growth of telecom sector in a
significant manner, sources said adding that revenue loss of this amount in one
year could affect some targets in the coming year.

The department, with an annual turnover of more than Rs 20,000 crore, was
reinvesting into the sector to achieve higher growth. Since the usage of long
distance telephony was more from well-off consumers, reduction of tariff could
not make any significant difference in the usage, while the low-end users were
hit by increase in local charges. If the revenue loss continues, the targeted
teledensity of five by 2005 could be affected. The department had targeted to
provide telephone in 45,000 villages during the current financial year, of which
10,000 village were connected by December 1999, sources said.