The Telecom Regulatory Authority of India (TRAI) has made some proposals to benefit DTH service providers in the country. TRAI has issued recommendations on the “Licence fee and policy matters of DTH services”. Under the new proposal, licensed DTH providers will be required to pay an annual licence fee of 3% of adjusted gross revenue (AGR). TRAI has also stated that the licence fee will be eliminated entirely within three years.
DTH service providers are required to pay a licence fee because of the policy guidelines that govern DTH operations in India. These guidelines mandate that providers obtain a licence to offer DTH broadcasting services in the country. The licence fee (LF) is a non-tax fee imposed on service providers as a privilege for being allowed to conduct licensed activities. As per the guidelines, DTH operators are obligated to pay a quarterly LF, which is 8% of AGR, to the Ministry of Broadcasting (MIB).
This new proposal will aid DTH service providers in several ways. Once the licence fee becomes zero, licensed providers need to submit a performance bank guarantee (BG). This BG should be of an equal amount to the initial BG, for example, Rs 5 crore, from any scheduled bank. Furthermore, the BG must remain valid for at least one year and be renewed annually. TRAI emphasizes that this ensures the BG remains valid throughout the duration of the licence agreement.
Additionally, TRAI has recommended that the licensor should have the authority to encash the BG. In cases where there is a violation of any licence conditions, DTH service providers will have the option to encash the BG, either partially or in full.
TRAI has stated in a released statement that “DTH licensees should not be charged any licence fee after the end of the financial year 2026-27. The licensee should submit an initial bank guarantee from any scheduled bank to the Ministry of Broadcasting (MIB) for Rs 5 crore for the first two quarters. Thereafter, the licensee should submit a bank guarantee (BG) from any scheduled bank to the MIB for an amount equivalent to the Initial BG (i.e., Rs 5 crore) or 20 per cent of the estimated sum payable, equivalent to the License Fee for two quarters and other dues not otherwise securitized, whichever is higher.”
TRAI also encourages the use of electronic bank guarantees to facilitate ease of doing business. These recommendations, including the definitions of gross revenue (GR), applicable gross revenue (ApGR), adjusted gross revenue (AGR), and the percentage of AGR used to calculate the licence fee for the DTH licence, may be applied prospectively.
