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Put Fiscal Infusion, Fibre Network Rollout On Speed Dial: Telecom Sector

The next government should restore the sheen of India’s beleaguered telecom industry by expediting steps to revive financial health and bolster fibre networks, bracing for 5G.

Phone companies and analysts said the immediate telecom agenda must be to cut hefty levies telcos face, exempt spectrum and licence fee payouts from goods and services tax (GST), price spectrum more affordable, make network gear (now attracting 20 percent import duty) duty-free and rapidly implement the new telecom policy — NDCP 2018.
The next government, they said, should also create a $10-billion fund to support fibre broadband network rollouts and explore ways to handhold young tech startups with cash to develop data-intensive content, along with music, movies and sports apps in local languages to ensure rapid adoption of 5G.

“The telecom industry, which is under tremendous stress, has sought urgent measures to improve cash flows, reduce costs and regain financial strength to ensure long-term sustained health and, we believe, speedy implementation of NDCP 2018 — which rightly treats telecom as a critical enabler of the digital economy will be a good step to strengthen the industry while benefitting all stakeholders,” P Balaji, chief regulatory and corporate affairs officer, Vodafone Idea, told.
National Digital Communications Policy 2018 aims to create four million jobs, draw in USD 100 billion of investment by 2022 and boost sectoral contribution to 8 percent of GDP, from 6 percent in 2017.

A one-time poster child of economic progress, telecom is today weighed down by nearly Rs 8 lakh crore debt and price wars. Fringe players have already exited, while some like Vodafone India and Idea Cellular have merged. The industry is now down to three large telcos VIL and Bharti Airtel among the older ones and Jio from nearly 10 a few years ago.

Hefty telecom levies—nearly 37 percent of every Rs 100 telcos earn is paid to the government have increased financial stress, and telcos warned it could exacerbate turmoil in the debt-laden sector, if not reduced forthwith.

Singapore-based Nitin Soni, director (corporate) at global rating agency Fitch, said a blend of out-of the-box thinking and fast implementation should top the telecom agenda. “If India is to catch up with the developed world on 5G, the next government must look at a creating a multi-billion dollar fund to support fibre network rollouts that are mandatory to support 5G data speeds of 10 GBPS and nextgen apps such as video on demand and Internet of Things.

The next government, he said, could also consider forming a state-owned telco that owns all the fibre resources and leases them out to the telcos for a fee as they do in Singapore and the UK. “Formation of a state-owned fiber-co would free private telcos from having to invest in expensive fibre networks, and in turn, improve their balance sheets and also avoid capex duplication,” Soni said.

Rajan Mathews, director general at Cellular Operators Association of India (COAI), which represents all telcos, said: “a huge priority of the next government must be to ensure 4G/5G network products are made duty free as these are absolutely essential as telcos expand 4G networks and brace for 5G.”―The Ghana Guardian

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