The Indian mobile telephony industry currently has a cumulative debt of 383,000 crore, having registered an increase of 30 percent in 2015-16, with many operators making negative returns on their investments. The levies on the Indian telecom services are in the vicinity of 26 percent, among the highest in the world. Levies as 8 percent license fee and on an average 5 percent spectrum usage charges need a relook on a priority basis.

To achieve broadband access for the next billion subscribers, an estimated investment of 9.6 lakh crore is required. Apart from the spectrum acquisition, which will be a major chunk, 60,000 base transceiver stations translate into a requisite investment of 60,000 crore, and 825,000 rkm of optical fiber to 24,750 crore. An additional 112,500 crore is required for microwave equipment.

2015-16 was the first year, when reduction in IUC, roaming services tariffs, and ceiling tariffs for SMS, while on national roaming, resulted in a steep decline of an estimated 8-10 percent?in voice realization rates, and the segment recorded negative to near-zero growth. The low price elasticity for mobile data services resulted in the segment revenue growth slowing down from its earlier triple-digit levels in the past two years to 40 percent last year. The growth in the number of smartphones being shipped has tapered off. And out of every six new smartphones added, only two are now getting connected on data.

The industry is looking at financing options, including specialized banks for infra rates, infra bonds, and tax-free bonds among others. However, a combination of low returns and slow revenue growth environment has slowed the equity investors' interest.

No doubt, the government has enabled much-needed policy reforms such as spectrum trading, spectrum sharing, and active infrastructure sharing. The industry is already witnessing early signs of consolidation.

Moving forward, it is only prudent that the government and the industry resolve to work together to remove the key barriers in the uptake of broadband services. A financially viable ecosystem needs to evolve if India is to achieve its lofty envisioned ambition of becoming a 1-Gbps society!


From the Editor's Desk

Anju Arora

Anju Arora is the founder and managing director of ADI Media Private Limited, a business-to-business (B2B) information provider. ADI Media’s B2B products include Communications Today, Medical Buyer, TV Veopar Journal, and Broadcast & CableSat

She is an Economics Honors graduate from Lady Shri Ram College, New Delhi and PGDP from Indian Institute of Foreign Trade. She has also participated in the OPM Key Executives Program at Harvard Business School.

Anju Arora is also the co-founder and executive director on the Board of ADI BPO Services Limited, the majority shareholder in MPS Limited, listed on all the major India stock exchanges and a Macmillan company till 2011.

 

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