Budget expectations: Telecom sector

13 Jan 2022 , 02:32 PM

“The Indian telecom industry has faced turbulent times, given its elevated debt levels amid low tariffs and the need for consistent capex. This was exacerbated by the verdict on adjusted gross revenue (AGR), which added to the payment liabilities of the telcos. In order to bail the sector out of the stress, the government in September 2021, offered a package for the industry which included a series of reliefs and reforms, including a four-year moratorium on government-deferred dues.

While the government had addressed a majority of the high-impact issues and has also indicated another round of reforms to be announced, the industry seeks a reduction in the levies (mainly licence fee and spectrum usage charges) to ease the financial burden on the sector.

The fiscal incentive schemes to drive domestic innovation and indigenous manufacturing as well as promoting the development of the ecosystem around new technologies like artificial intelligence, machine learning, etc, should be looked at. The production-linked incentive (PLI) scheme to boost the domestic manufacturing of telecom gear is also likely to receive more attention to attract investments.

Further, steps to boost infrastructure in rural and remote areas should remain in focus, with stimulus for increasing broadband penetration. Also, clear guidelines for right of way related issues to expand infrastructure is also a crucial aspect that the government will have to look into, given the advent of 5G.”

Source: ICRA

The views and opinions expressed are not of IIFL Capital Services, indiainfoline.com