The Indian government is anticipating a more than 33% decrease in revenue from the telecom sector to INR 82,442.84 crore in FY26, compared to the higher-than-expected INR 1,23,357.20 crore garnered in the current fiscal year ending March 31, according to budget documents.
The expected drop in revenue for FY26 follows a 2.6% increase in the government's earnings in FY25, which was higher than the originally projected INR 1,20,267.31 crore.
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FY25 Breakdown
The increase in revenue in FY25 was attributed to spectrum allocated to state-run BSNL and the Railways, as well as significant advance payments made by Bharti Airtel for past spectrum auctions. Additionally, revenue from the second 5G spectrum sale in June, 2024, also contributed to the higher revenue.
In FY25, the government also benefited from advance payments made by Airtel towards outstanding airwave dues. Airtel paid INR 3,626 crore to the Department of Telecommunications (DoT) in December, 2024, clearing all liabilities related to airwaves purchased in a 2016 auction ahead of schedule.
Moreover, Airtel prepaid INR 28,320 crore in spectrum dues in 2024, which includes payments for spectrum acquired before 2016. The government had allocated INR 62,000 crore worth of 5G spectrum to BSNL and some 700 MHz spectrum to the Railways in FY25.
Additionally, a portion of the revenue from the second 5G spectrum sale in June, 2024, was collected. The demand for spectrum in the last 5G sale was limited as a significant portion of the required airwaves had been auctioned in 2022.
FY26 Outlook
Analysts anticipate that a significant portion of the estimated revenue (predicted to reach INR 82,442.84 crore) from the telecom sector in FY26 will come from upcoming regulatory payments made by telcos, such as deferred spectrum and adjusted gross revenue (AGR) dues, once the moratorium on these payments ends in September, 2025. JM Financial estimates that Vi's payment obligation to the government will be worth around INR 29,100 crore in FY26.
The government's revenue from the telecom sector primarily consists of license fees and spectrum usage charges (SUC) paid by telcos, which are calculated based on the AGR of telcos. Operators pay 8% of their AGR towards licensing fees and a reduced percentage towards SUC (following changes in government policy in recent years). For telecom networks licensed for captive use, a fixed license fee is charged based on specific criteria, along with a one-time entry fee for new operators.
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