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February 28, 2001                                       Feedback  

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Sector Focus : Telecom Services

Telecom services industry: Post-budget

Telecom services: State of the industry (2000-01)

  • In 2000-01, revenues of the telecom services industry in India are expected to increase by 18 per cent, as compared with those in 1999-2000.
  • In basic services, the growth in demand is expected to be significant in the non-metro areas and the southern states. However, private sector participation continue to remain marginal. (Six service providers are expected to account for 3 per cent of new line additions in 2000-01.)
  • In 2000-01, the growth in cellular services is expected to be at around 100 per cent, due to a significant decline in airtime charges and prices of hand sets.
  • During the 2000-01 period, growth rate in internet services is expected to be over 150 per cent, largely due to the high growth in demand for internet services. The growth in demand for internet services could also be partly attributed to the significant decline in internet service charges.
  • During the April-January 2000-01 period, significant policy decisions were taken
  1. - In August 2000, the Government announced the policy for the introduction of competition in the domestic long distance telecommunications segment.
  2. - In September 2000, the Government announced that competition would be introduced in the international voice telecommunications segment in 2002.
  3. - In October 2000, the erstwhile Department of Telecom Services was corporatised and incorporated as Bharat Sanchar Nigam Ltd.
  4. - The standard tariffs for basic services were reduced with effect from October 1, 2000, as per the second phase of tariff reductions ordered by the Telecom Regulatory Authority of India (TRAI).
  5. - In January 2001, guidelines for the entry of new basic service providers were announced. The Government also announced that fixed service providers would be permitted to provide mobile services within a local area. In addition, the licence conditions for a fourth cellular service provider in each service area, were also announced.

Telecom services: Budget impact

  • The concessional rates of duties, on imports of specified categories of telecom equipment by service providers, have been made applicable till March 2002. (These duties were earlier applicable till March 2001.) This is expected to have a positive impact on providers of cellular services, as most of the cellular infrastructure equipment can be imported at concessional rates.
  • Tax holiday benefits for telecom infrastructure projects, have been extended for projects that commence before March 31, 2003. (These benefits were earlier applicable only for projects that had commenced before March 31, 2000.)This is expected to have a positive impact on new broadband, internet, basic and cellular service projects.

Rediff-CRISIL Budget Impact Analysis
Budget 2001

Disclaimer: CRISIL has taken due care and caution in compiling this report. Information has been obtained by CRISIL from sources which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of its web site.

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