Telecom industry rings in with directory full of expectations

May 19th, 2009 - 11:42 am ICT by IANS  

By Pupul Dutta
New Delhi, May 19 (IANS) Allocation of frequency for telecom service providers and new rules for subscribers to switch operators using the same telephone numbers are among the policy initiatives for the sector expected to be on top of the agenda for the new government.

The new government is also expected to take the real first step towards listing the state-run Bharat Sanchar Nigam Ltd (BSNL) on stock exchanges as the move could not materialise earlier in the wake of opposition by Left parties during the outgoing government’s reign.

And when the listing happens, it will be the largest yet on the Indian bourses given the size of BSNL and the regulatory requirement of a minimum 10 percent floating stock for listing companies on stock exchanges.

“BSNL has been at an unwanted disadvantage which has stunted its growth,” said T.V. Ramachandran, director general of the Cellular Operators Association in India (COAI), the industry lobby for GSM mobile phone providers.

“The listing will not only generate healthy competition but also bring the company into mainstream competition with other telecom operators,” Ramachandran told IANS.

The BSNL board had proposed an initial public offering of 10 percent equity last year, which was estimated to fetch $10 billion and give the company a valuation of a whopping $10 billion.

The Congress party has also said in its manifesto that although it rejects the blind divestment policy of the previous National Democratic Alliance (NDA) government, it nevertheless believes the Indian public has the right to own shares of state-run enterprises.

The industry also expects some rationalisation of the revenue-sharing regime. It feels the present requirement of sharing 25-30 percent of the revenues with the government is steep, as the tariff for telecom services in India is among the lowest in the world.

“With declining revenues per user, the cost of operating the service has become really high. We really hope the government recasts the current revenue-sharing regime,” said Gurdeep Singh, chief operating officer of Aircel Ltd.

“The spectrum charges and licence fee in the country are already the highest in the world. But now, with a stable government, I hope all these price related issues are resolved,” he added.

On the issue of spectrum allocation, several players are keenly awaiting the government nod. The auctions were suspended several times in the past over several issues, including differences within the government on the base price.

“India is ready for 3G (third generation mobile telephony). With the Congress-led UPA government back in power, we expect the agenda to continue and auction of both 3G and Wimax spectrum to happen some time soon,” Singh said.

The 3G service allows not only much faster communications but also a wide range of applications such as high-speed net access, video calls, fast music and video downloads, interactive gaming and global positioning over Internet.

“The telecom sector needs a stable spectrum policy,” said Sunil Mittal, chairman of the Bharti group that had announced its having touched the milestone of 100 million subscribers last week. He said this policy could be based either on client base or on auctions.

The Congress manifesto also promises to connect each of India’s 600,000 villages with broadband network within three years to take the information technology and telecom revolution to the hinterland.

“For every village to be connected with the Internet, it is important that Wimax and 3G services are rolled out fast,” said Ramachandran, adding it was important in this regard to auction the frequency spectrum soon.

As far as consumers are concerned, while they expect tariffs to fall further, especially on long-distance and international telephony, they are also awaiting a policy on number portability - which will allow them to switch service providers without having to change their telephone numbers.

The industry also hopes the government will relax the levy paid by the private operators to the government - called fee for universal service obligation (USO) - to help telecom penetration in rural areas, as they were once found unviable.

Last year, the government was looking at reducing it from five percent to two percent but kept the decision in abeyance.

Private telecom operators hope a decision on reducing USO will be taken soon as they have themselves started focussing on the hinterland sensing that the next phase of growth will be in villages.

(Pupul Dutta can be reached at

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