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Fibre network should expand by four times to meet growing data demand, says ICRA

March 26, 2019
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According to ratings agency, ICRA the fibre network in India should be expanded by at least four times through investments required to the tune of Rs 2.5- Rs 3 trillion in order to meet the growing data demand.

ICRA stated that India’s per capita fibre coverage stands at 0.09 fibre km as against the 0.87 fibre km for China and 1.3 fibre km for Japan and US.

ICRA also highlighted that the sharing of fibre among multiple telcos would be the key driver for attaining a reasonable return on capital. Moreover, spinning off of fibre assets by Airtel, Vodafone Idea, Reliance Jio and BSNL and possible sharing of fibre assets by Bharti Airtel and Vodafone-Idea would also free up capital for the telcos.

As per ICRA’s estimates, the market value of the fibre assets owned by the major private operators is around Rs 1,200 billion and a small quantity of stake sold can generate sufficient funds to improve the liquidity position of operators.

Meanwhile, for independent fibre assets, tariff structures, revenue models, and service agreements would have to emerge. This is because the profitability is expected to be directly related to the extent of sharing and the amount of traffic carried, as it leads to significant addition to revenue at a relatively lower incremental cost.

 

 
 
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