Global rating agency, Fitch ratings in its latest report has said that a new telecom policy, namely National Digital Communications Policy (NDCP) 2018, will help companies in serving growing data needs, cut costs and reduce red tape. The new policy aims to attract $100 billion in investments, create four million jobs in the telecom sector by 2022, and boost the sector's contribution to 8% of GDP from 6% in 2017 as well as backing the principles of net neutrality.
According to the report, the NDCP's plan to expand broadband coverage funded by the universal service obligation fund and in partnership with private telcos is expected to support private telecom companies' growth, as it will broaden the customer base and improve Internet adoption, particularly in rural areas. However, it said that implementing proposals like connecting six lakh villages to the broadband network, establishing two million Wi-Fi hotspots in rural areas and one million in urban areas, will be a challenge.
The rating agency also cautioned that accelerated 5G deployment will encourage companies to increase investment in 5G spectrum which, depending on the 5G spectrum asset price, may further stretch already heavily indebted balance sheets over the next two years. It pointed out that at present, the telcos face a lot of pressure on taxes through licence fees, spectrum usage charges and universal service fees on top of expensive spectrum assets, while the litigation is also high.