New telecom policy to help firms expand coverage, cut cost, red tape: Fitch

The Union Cabinet approved National Digital Communications Policy 2018, which aims to attract $100 billion investment

The new telecom policy will help companies in serving growing data needs, cut costs and reduce red tape, a report said on Friday.

The Union Cabinet on Wednesday approved the National Digital Communications Policy (NDCP) 2018, which aims to attract $100 billion investment and create four million jobs in the sector by 2022.

Private telecom companies' growth will be supported as the NDCP focuses to expand broadband coverage funded by the universal service obligation fund and in partnership with private telcos, global ratings major Fitch said in the report.

It explained that this will be possible through broadening of the customer base and improvement of Internet adoption, particularly in rural areas.

NDCP's plan to encourage more efficient spectrum usage will also help private telcos by making available harmonised and contiguous spectrum bands and further liberalising spectrum sharing and trading, it said.

The agency said implementing proposals like connecting 600,000 villages to the broadband network, establishing two million Wi-Fi hotspots in rural areas and one million in urban areas, will be a challenge.

Accelerated 5G deployment will encourage companies to increase investment in 5G spectrum which, depending on the 5G spectrum asset price, may further stretch already heavily indebted balance sheets over the next two years, it warned.
 

However, the agency was quick to add that private telcos may also skip 5G spectrum auctions if the prices are "too high".

On the positive side, the report said NDCP's plans to review and rationalise the sector's tax structure and optimise future spectrum asset pricing can cut telcos' costs and the red tape.

The agency said at present the telcos face a lot of pressure on taxes through licence fees, spectrum usage charges and universal service fees on top of expensive spectrum assets, while the litigation is also high.

In what can come as a relief for the sector, which has been impacted since the launch of the deep-pocketed and aggressive new entrant Reliance Jio, the agency said emergence of three large operators will eventually ease price competition.