High D?bt Burd?n and Str?ss on Profitability
d?bt burd?n and str?ss on profitability India’s t?l?com industry which is a
major contributor to th? country’s GDP is going through chall?nging tim?s wh?r?
maintaining a balanc? b?tw??n mark?t dynamics and tim? to d?liv?r has cr?at?d a
bottl?n?ck for TSP’s. Tariff wars, incr?asing d?bt burd?n, sp?ctrum lic?ns? f??s
and n?w typ?s of int?rn?t bas?d play?rs ?tc. hav? fu?ll?d this situation r?sulting
in a phas? of financial str?ss in th? industry.
Th? t?l?com industry at this point of tim? has
a d?bt burd?n of clos? to INR 5 lakh cror?s in its qu?st to provid? stat? of th?
art infrastructur? and buy sp?ctrum. This d?bt incr?as? has b??n primarily driv?n
by high sp?ctrum procur?m?nt costs from fiv? succ?ssiv? auctions wh?r?in th?
high?st bid/sal? pric? at on? auction acts as a floor pric? for th? succ??ding
auction. Aggr?ssiv? participation of s?rvic? provid?rs in sp?ctrum auctions has
significantly incr?as?d th? d?bt burd?n. Th? d?clining tr?nd in th?
profitability of th? TSPs is lik?ly to continu? du? to various r?asons lik? ?ntry
of Gr??nfi?ld TSPs as against th? ?xisting brown fi?ld op?rators which will hav?
to und?rtak? hug? inv?stm?nts for updating th?ir ?xisting infrastructur?, participat?
in sp?ctrum auctions, imposition of multipl? tax?s.
T?l?com Tow?r Installations
acquisition is on? of th? major op?rational chall?ng?s with r?sp?ct to tow?r
installations. To ?as? th? sit? acquisition proc?ss, th? gov?rnm?nt has roll?d
out an initiativ? wh?r?by tow?r provid?rs will b? allow?d to install t?l?com
tow?rs on gov?rnm?nt sit?s. As gov?rnm?nt buildings ar? w?ll spr?ad out in
important locations of th? country, th?y can act as a crucial ?nabl?r for
improving conn?ctivity for mobil? phon? us?rs.
S?rvic? Provid?rs (TSPs)/Infrastructur? Provid?rs (IPs) in India sp?nd
significant cap?x on r?c?iving Right of Way (RoW) p?rmissions from local gov?rnm?nts
and municipal bodi?s. RoW p?rmissions ar? a pr?r?quisit? for TSPs to b? abl? to
d?ploy optical fibr?.
tow?r compani?s ar? looking at alt?rnativ? solutions to pow?r t?l?com tow?rs
such as DG s?ts, batt?ri?s, ?tc. in ord?r to ?nsur? continuous availability of
t?l?com s?rvic?s. Furth?r, op?rators can bring about annual savings of 20- 25 p?r
c?nt on fu?l cost by using ?ffici?nt ?n?rgy storag? applications.
Th? gov?rnm?nt may consid?r d?lib?rations on th? sam? with
TSP’s whil? formulating polici?s and r?gulations to addr?ss chall?ng?s fac?d by
all contributors/ v?rticals of th? s?ctor in its ?ntir?ty.
T?l?communications, b?ing an und?rlying s?rvic?
to majority of industri?s contribut?s significantly towards th?ir op?rating
costs. L?vy of high?r tax?s (r?c?nt incr?as? by 3 p?r c?nt putting th? t?l?com
s?ctor und?r th? 18 p?r c?nt tax slab24) on t?l?com industry may l?ad to an ov?rall
incr?as? in th? cost of doing busin?ss for oth?r s?ctors and may impact
affordability for th? ?nd custom?rs. Thus, r?duction in s?rvic? tax may b?
consid?r?d by th? gov?rnm?nt.