The only bright spot seems to be the parties’ promises to push up consumer spending on communication services, Fitch Solutions said in an analysisNew Delhi: At a time when businesses are looking at the major political parties in India to announce sops for their respective sectors, the telecom sector appears to be losing as neither the Bharatiya Janata Party (BJP) nor Congress has pledged any significant policy reform for the debt-ridden sector, Fitch Solutions Macro Research said. The only bright spot seems to be the parties’ promises to push up consumer spending on communication services, it said.
‘Populist measures could lend telcos tailwind’
“Neither the Bharatiya Janata Party (BJP) nor Indian National Congress (INC) are pledging significant policy reform in the telecom sector, which will continue to suffer from depressed earnings nor elevated debt levels in the near term. Populist measures could lend tailwinds to increased short-term spending on communications services,” Fitch said in its industry trend analysis report.
Fitch Solutions also said that the mobile subscription growth in India could outperform Asia, which has an average compound annual growth rate (CAGR) of 1 percent, by settling at 1.7 percent over the 2019-28 period. The jump is likely to come from the populist measures announced by the two political parties and continued price-led competition, which is going to draw first-time subscribers.
National broadband connectivity
Both BJP and INC have promised to connect every village in India under the national broadband connectivity scheme. This is despite the fact that the implementation of the nationwide BharatNet broadband project, which was officially launched in 2011, seems to be stuck. The plan by the Congress-led United Progressive Alliance (UPA) government then was to connect all 2.5 lakh village panchayats in the country.
“That administration itself made little progress towards rollout, with most of the infrastructure deployed by the successor BJP-led National Democratic Alliance (NDA) government instead. The initiative itself, however, has missed several deadlines, and as of December 2018 the government announced that about half of the village blocks were connected to the broadband network,” Fitch Solutions said.
PSU Watch is a business news brand of 27 Frames Communications LLP. It places the spotlight on PSUs, Governance, Bureaucracy, Defence and Public Policy as the sector traverses through a period of radical change.