Industry needs Rs 1,60,672cr to achieve 11.5pc tele-density

Amiti Sen

New Delhi, Dec 9: A total of Rs 1,60,672 crore needs to be pumped into the telecom sector during the Tenth Plan to achieve the targeted tele-density of 11.5 per cent. As per the estimates of the department of telecommunications (DoT), the public sector is expected to invest about Rs 114.381 crore while the remaining Rs 46,291 crore worth of investments has to come from the private sector.

An additional investment of Rs 6,000 crore is also required during the Plan to have state-of-the-art facilities in the telecom equipment manufacturing industry.

To encourage private investments, the working group on telecom sector for the Tenth Plan suggested that an apex body of industry associations should be formed as a forum for evolving a unified approach on various issues related to the telecom service industry.
This would help to avoid perceived “policy uncertainties,” helping progressive implementation of policy initiatives.

It added that for migrating to the conversion regime, operators should not be asked to start all over again to revalidate the licenses issued by DoT. The terms and conditions for migration to the new converged regime should be spelt out clearly, it said.

The model guidelines suggested by the committee on right of way should be adopted by all states and other agencies to ensure speedy implementation of projects, the report said.

The working group pointed out that as 70 per cent of the required investments would come from the public sector, it was essential to give certain incentives to them. The five-year tax holiday for telecom service companies should also be extended to Mahanagar Telephone Nigam Ltd and Bharat Sanchar Nigam Ltd, it said.

Of the total investment required, about Rs 44,160 crore is required for rural areas to achieve a tele-density of the targeted 3 per cent. The working group cautioned that since provision of phones in rural areas was not going to be remunerative, most operators would hesitate to provide rural telecom facilities in accordance with government policy unless firm and clear financing arrangements were made.

The report said the universal service obligation fund should be made operational by taking an early decision on its nature, the required manner of disbursements and the levy to be imposed so that uncertainty is resolved and investment in rural areas is not impeded.

The working group has also suggested the setting up of a telecom development fund into which the revenue earned by the government from the telecom sector should be deposited and ploughed back into rural communication through soft loans to service providers in these areas.