As the 10 days spectrum bidding process has ended, eight telecom companies, have bought spectrum worth more than Rs 60,000 crore against the government’s estimate of Rs 47,933 crore. While, this is surely set to bring more wealth to the exchequer, however, at the same time this would translate towards operators increasing challenges to expand their network in rural areas of the country.
While the big cities and metros of the country enjoy good telecom network coverage, according to industry estimates, there are more than 50,000 villages which are not connected to any network in India. And at a time when these villages and other poorly connected areas badly need to connect to the stream of networks, telcos after paying huge sums for spectrum, will find it increasingly difficult to expand their networks and even contribute to the USO fund.
“We are glad that the auctions are over and we feel that the Government has emerged as the real winner. While the industry is relieved at the conclusion of the auctions, there also lies disappointment at the winning price points. Some concerns however remain, regarding the impact of the auctions on the NTP 2012 objectives – especially related to rural penetration, broadband for all, internet access, etc. It remains to be seen if the operators will have the financial resources to invest in networks and marketing after bearing the high spectrum costs,” says, Rajan S Mathews, Director General, COAI.
Also, in order to help the industry overcome this huge financial burden, the government should address the high tax/levy structure on the industry. We would urge the government to reduce the SUC and the USOF levy to 1% to provide some relief to the telcos.” he added.
Even though telecom operators are not talking about any immediate increase in service tariffs for the end customer, it cannot be ruled out, considering the fact that the industry is going through a tough phase.