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Telecom sector witnessed FDI inflows of Rs 670 billion in first three quarter of 2016-17, says ASSOCHAM-KPMG joint study

July 17, 2018
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According to a joint study by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) and KPMG, Indian telecom service providers (TSPs) have invested approximately Rs 9.27 trillion while foreign direct investment (FDI) in the industry has increased from Rs 200 billlion in 2015-16 to approximately Rs 670 billion in the first three quarters of 2016-17.

This capital infusion has contributed towards building an efficient infrastructure to provide accessible and affordable service to customers. According to the study, TSPs play a crucial role in the growth and transformation of multiple sectors such as IT, insurance, education, health, public sector, etc.

The study reveals that a fairly conducive regulatory environment has been created for TSPs through implementation of new policies and regulatory framework by the Telecom Regulatory Authority of India (TRAI). The gross revenue of TSPs stood at approximately Rs 1.88 trillion, a decline of 2.68 per cent in 2016-17.

As per the study, India is now among the biggest smart phone markets in the world in terms of volume with an increase in the usage of data services leading to a rapid increase in smart phone sales. Four out of every 20 mobile subscribers in metro circles have a 4G enabled smart device and 11 have a 3G enabled smart device. Data consumption was driven by social media and messaging apps with nearly 90 per cent consumers accessing apps on mobile devices. Videos continued to be the main growth engine for data traffic with nearly 65 per cent contribution.

The telecom industry is going through challenging times and is burdened with increasing debt and spectrum license fees in the midst of tariff wars and competition from new types of internet based players. The declining trend in the profitability of TSPs is likely to continue due to various reasons such as hyper competitions, massive investments, upcoming spectrum auction, multiple taxes and levies, Universal Service Obligation Fund  contribution and license fee.


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