The past year was an eventful one for the telecom infrastructure industry, with several positives on the policy front, and an exponential increase in data demand that led to an accelerated roll-out of towers and increased tenancies. India Infrastructure recently organised a conference, “Telecom Infrastructure in India”, covering the key trends in this space as well as emerging sector needs and requirements. In this section, we bring you the key highlights of the conference…
The Indian telecom industry plays a significant role in the government’s nation-building agenda. It contributes about 6.5 per cent to India’s GDP, and is among the highest recipients of foreign direct investment. The industry has invested about Rs 3.27 trillion in spectrum auctions since 2010, and has made the second largest private sector investment of Rs 9.2 trillion in the infrastructure sector. Further, it has created employment opportunities in the country, generating 2.2 million direct jobs and 1.8 million indirect jobs.
The government is now striving to transform India into a digital society through various initiatives like Digital India, the Smart Cities Mission and the BharatNet project. The country’s telecom sector has become the backbone of such initiatives. Operators have installed around 1.4 million base transceiver stations (BTSs) across the country till date and provided mobile connectivity to around 500,000 villages.
Key trends
The evolving dynamics of the telecom space have brought in several changes in the industry. A primary change among these has been the proliferation of data in the country. According to market reports, mobile data traffic is expected to grow twelvefold between 2015 and 2020, at a compound annual growth rate (CAGR) of 63 per cent. In contrast, as per the growth forecast for the Asia-Pacific region, it stands at a CAGR of 54 per cent. Another key trend is the growing adoption of mobile banking owing to the government’s demonetisation initiative and the move towards a cashless economy. During 2016, cashless transactions in the country in-creased to 22 per cent after demonetisation.
Challenges for the industry
Although the Indian telecom sector has been growing by leaps and bounds, it has been facing several challenges. A key challenge is its poor financial health. The industry has been subjected to one of the highest taxes and the lowest telecom tariffs in the world, which results in lower revenues and ARPUs for operators. The adjusted gross revenue for the industry declined from Rs 1,476 billion in December 2015 to Rs 1,106 billion in December 2016. Meanwhile, the ARPU declined from Rs 123 to Rs 114. As a result, the sector is expected to witness single-digit growth during fiscal year 2017-18. Declining revenues for the sector also imply lower earnings for the government from spectrum usage charges and licence fees. This is a cause for concern according to the Telecom Commission. In addition, the sector bears a huge debt burden, of around Rs 4.2 trillion. Another issue faced by the sector pertains to low spectrum allocation and the high price of spectrum, which hamper network deployment by telecom operators.
In addition, a multiplicity of policies is plaguing the sector. Although the government notified uniform right-of-way (RoW) rules in 2016, all states still have their own rules for providing RoW, resulting in delays in tower roll-outs. The RoW issues related to fibre roll-out such as fibre cuts are also a cause of concern for operators.
Other major issues faced by the industry include recurring fear among users regarding electromagnetic field radiations emitted by telecom towers; external interference in border circles due to illegal jammers/boosters/repeaters that affect network quality; poor availability of power on tower sites, which affects network uptime and quality of service; restriction on single-window clearances; and multiple fees and levies imposed on the sector.
Recommendations
In order to improve the overall performance of the sector, the government needs to work in close collaboration with industry stakeholders. In addition, the industry needs government support to uniformly implement the RoW rules across all states. Further, it needs to encourage single-window and time-bound clearances for the installation of tower sites, and set up a preferential tariff regime as demanded by operators. The government can grant quick permissions for the installation of mobile
towers and in-building solutions on government buildings, defence land, airports, railway stations and residential complexes. Further, the government’s announcement of providing 24×7 power supply by 2018 is a positive development for operators as they need 24×7 power availability at industrial rates to ensure seamless connectivity on their networks.
A concrete government policy needs to be enforced to curb interference in the operators’ networks in the border states of Jammu & Kashmir, Punjab, Gujarat and Rajasthan.
In recent times, the sealing of towers by local municipalities without any show-cause notices has created havoc for operators. Thus, the government needs to ensure that no sites are shut down without the Department of Telecommunications’ permission. These recommendations need to be kept in mind for a smooth transition to a digital economy.
Based on a presentation by Rajan S. Mathews, Director General, Cellular Operators Association of India
