Federal Court denies appeal in dispute over telecommunications industry levy calculation

Earnings from leasing infrastructure are part of telecommunications sales revenue, ruling finds

Federal Court denies appeal in dispute over telecommunications industry levy calculation

The Federal Court has dismissed an appeal by Indara Pty Ltd (formerly Axicom Land Pty Ltd) regarding the calculation of its telecommunications industry levy by the Australian Communications and Media Authority (ACMA).

The imposition of the telecommunications industry levy aims to fund public interest telecommunications services across Australia. Under the scheme, participating entities, including carriers and carriage service providers, should report their eligible revenue to the ACMA, which calculates their levy contributions.

Indara’s case involved Axicom Pty Ltd (APL), a related entity that earned $200.6m in revenue primarily from leasing wireless communication sites during the relevant period.

The ACMA decided to include APL’s revenue in Indara’s telecommunications sales revenue, which was a component of Indara’s eligible revenue for the purpose of calculating its telecommunications industry levy for the 2019–20 period under the Telecommunications (Consumer Protection and Service Standards) Act 1999.

The ACMA determined that APL earned the revenue from an activity within the telecommunications industry, specifically from providing access to wireless communication infrastructure, which was integral to telecommunications networks.

Before the court, Indara provided two grounds of appeal. First, it alleged that the ACMA misinterpreted the legislation when it included APL’s revenue in the calculation. APL’s activities were not part of the telecommunications industry since they involved the leasing of passive infrastructure such as towers, land, and rooftops instead of active telecommunications services, Indara claimed.

Second, Indara challenged the ACMA’s refusal to exercise its discretionary powers to declare APL’s revenue as non-telecommunications sales revenue under s. 9(2) of the Telecommunications (Eligible Revenue) Determination 2015.

Calculation affirmed

In Indara Inbuilding Solutions Pty Ltd v Australian Communications and Media Authority, [2024] FCAFC 11, the Federal Court rejected all of Indara’s appeal grounds and affirmed the decision by the ACMA to include APL’s revenue in Indara’s calculation of the telecommunications industry levy.

The court concluded that the ACMA made no error either in assessing Indara’s eligible revenue or in declining to exercise its discretion under s. 9(2).

Regarding the first appeal ground, the court ruled that APL’s revenue was eligible for inclusion in Indara’s levy calculation because its leasing of infrastructure to telecommunications providers fell within the ordinary meaning of telecommunications industry and because APL’s infrastructure supported telecommunications networks and services.

As for the second appeal ground, the court found that the ACMA’s s. 9(2) power was intended to provide clarity in cases of uncertainty regarding the proper classification of revenue, not to recharacterise revenue correctly classified under the ordinary meaning of the legislation.

The ACMA based its refusal to exercise its discretion under s. 9(2) on a reasoned application of policy, including the principle that comparable revenue earned by other participating entities had consistently been treated as telecommunications sales revenue, the court said.

Lastly, the court rejected Indara’s argument that the ACMA failed to consider relevant factors such as the nature of APL’s business and its lack of direct benefit from public telecommunications services. The ACMA had considered these matters during deliberations and had decided that they did not outweigh broader policy objectives, the court explained.

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