High spectrum price and cost of deploying networks are expected to take take a toll on debt-ridden telecom sector, a senior official of Bharti Enterprises said on Monday.
Bharti Enterprises Vice Chairman Rakesh Bharti Mittal while speaking at India Mobile Congress 2019 said 75 per cent of cost of deploying optical fibre in the country for high speed broadband is the fees charged by local authorities.
"Current reserve price is seven times higher than the global peers'. When we look at the entire ecosystem that needs to be built, user cases for 5G technology needs to be built. This high price coupled with more capex deployment on sites and fibre is going to take a toll on telecom sector," Mittal said.
He said currently average revenue per user in telecom sector in India is around $1.5 compared to $36 in the US and $6.5 in China.
"Inspite of that, capex spent is same, at par with what global telcos are spending. 34 per cent is being spent on capex and Airtel last year had spent 40 per cent of total revenue in capex deployment.
"Globally, the average is sub-20 per cent. This itself brings lot of stress on telcos to not only keep on serving customers while providing good quality but also keep on spending on capex as the database grows and as the demand for data is phenomenal," Mittal said.
He said litigation in the sector is also adding to the woes of the industry.
"We need to improve ease of doing business. There is about Rs 1 trillion worth of litigation that needs to be settled. GST credit needs to be unlocked. We need to have more conducive regulatory environment," Mittal said.