MUMBAI: Credit rating agency, Fitch Ratings, stated that India's new National Digital Communication Policy (NDCP) could manage to benefit the telecom sector by making it easier to meet continuous rising data demand and focusing on tax and fee duty on the manufactory.
5G spectrum auctions could be skipped by the Indian telcos if prices are too high. The Indian telecommunication companies are likely to raise investment in 5G spectrum which directly depends on the 5G spectrum principal price. This can overextend the liabilities on balance sheets of these companies.
Furthermore, Fitch also explained how private telcos are going to benefit and enlarge their broadband coverage funded by the universal service obligation fund.
By initiating and creating two million Wi-Fi hotspots in rural areas and another one million in urban areas, the NDCP plans on connecting almost more than 600,000 villages to the digital network. Although, according to Fitch, there are going to be a few execution challenges but it will only lead to broadband adoption rate increasing and going higher.
The research report also stated that telco costs and red tape could be cut by the NDCP's plans to review and rationalise the sector's tax structure and optimise future spectrum asset pricing.
A Fitch statement read, “Indian telcos face heavy and multiple taxes - including licence fees, spectrum usage charges, and universal service fees on top of expensive spectrum assets. Meanwhile, intense competition has limited telcos' pricing power. Overall, these pressures have stretched balance sheets”.