Telcos need Rs 90,000 cr capex for 100% teledensity in villages by 2020: E&Y-Assocham

Telecom sector, which contributes about 6.9% of country's GDP is burdened with huge debt

Indian telecom operators will require an incremental capital expenditure of about Rs 80,000 crore to Rs 90,000 crore toachieve 100% teledensity in rural areas by 2020, according to an analysis by global consulting firm Ernst & Young and industry body Assocham.

The industry will need to add more than 50 crore rural subscribers at CAGR of 12-13% till 2020, the study suggested.

The telecom sector, which contributes about 6.9% of the country’s GDP is burdened with huge debt. Also, stagnating revenue of the sector is leading to to decline in operators’ investments, delay in network expansion and high tariffs, are making telecom services unaffordable for consumers, the study pointed out.

Referring the Government’s National telecom Policy 2012, the analysis stated that the need to achieve 52 crore broadband connections at CAGR of 29% by 2020, the operators will need a capex investment of Rs 1,30,000 crore to Rs 1,40,000 crore.

Addressing the Parliamentarians at the Assocham roundtable discussion, Prashant Singhal, Partner in member firm of Ernst & Young Global said, “It is imperative for the Government to enable favourable policy environment, such that the Indian citizens can be empowered and contribute to the socio-economic development of our country. Further, cumulative capex is estimated to be Rs 2,50,000 crore for 2013-20, by telecom operators to meet next level of growth, which can be utilized only by increasing rural tele-density, indigenous manufacturing and providing broadband connections to achieve 60 crore subscribers by 2020.”

“The telecom industry has been the flag-bearer of the Indian liberalization, reforms process and has driven connectivity from a tele-density of 0.8 per 100 persons, in 1994 to over 70 per hundred persons today. While the Government has on its part, given unstinting support to the telecom sector and the industry has responded and lived up to the requirements achieving high telecom penetration at affordable prices, the task is not yet complete, because we still need to bridge the growing rural-urban digital divide (40% vs 149%)”, said T V Ramachandran, Chairman (National Telecom Council), Assocham.