Event update: Telecom - TRAI starts consultation for NTP 2018
Event
TRAI issued consultation on formulation of National Telecom Policy (NTP) 2018, and has listed out objectives that the regulator and government intend to achieve by 2022.
Key objectives of the policy
- To increase rural tele-density to 100% (56.3% as of Sep 2017)
- Enable wired broadband to 50% of the households
- Develop 10 million public Wi-Fi hotspots in India
- Enable access for connecting to 10 billion internet of things (IOT)/machine to machine (M2M) sensors/device
- Attract US$100 bn of investments
Key discussion points in the consultation paper
- Recognise communications sector as essential infrastructure and provide financing
- Review license fee, universal service obligation fund (USOF) levy and spectrum usage charge (SUC)
- Review license and regulatory compliance costs, in line with international practices
- Working towards one-nation-one license regime
- Allow broadcast services using cellular mobile networks
- Separate network and service layers
- Introduce regulatory framework for IOT/ M2M services providers, including earmarking spectrum
Our view
The Indian telecom sector has been reeling under the pressure of debt, and we could possibly see telecom operators pushing for reduction in government levies in the NTP 2018 consultation process, which includes – license fee, USOF and SUC. We do think that there is merit in operators pushing for reduction in SUC, as the spectrum owned by operators is now auction purchased. Additionally, the government has excess USOF of Rs496bn (US$7.8bn) and annual expenditure of Rs72bn in FY17 and Rs21.6bn in FY18E. SUC and USOF are roughly 3-4% and 4-5% of revenues, respectively, and any reduction will be positive for wireless operators. Additionally, we could see regulatory framework for IOT and M2M services, which could create potential revenue streams. We have seen some investments by players like TCOM towards the LORAWAN technologies. We maintain our positive stance on Bharti Airtel, given the company’s well-capitalized balance, intent and ability to invest in the network.
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