Bloomberg News

India May Need ‘Tens of Billions’ in Broadband Network Spending

September 06, 2011

Sept. 6 (Bloomberg) -- India needs to spend “tens of billions” of dollars to expand its broadband network, as Asia’s third-biggest economy targets better public access to information and services, an adviser to the government said.

The next phase of growth in India’s telecommunications industry will come from expansion of broadband connectivity to cover government offices, manufacturing and media, Sam Pitroda, the adviser on public information infrastructure to Prime Minister Manmohan Singh, said in an interview in Tokyo today.

Companies including Bharti Airtel Ltd. and Qualcomm Inc. last year bid 257 billion rupees ($5.6 billion) to buy licenses to offer wireless broadband Internet services in the world’s most populous nation after China. Japanese companies could use this opportunity to provide equipment and services in a market where the number of broadband connections is expected to jump 13-fold to 160 million by March 2015.

“We’d like to see the Japanese participate this time,” said Pitroda. “It requires a lot of investment. It requires local presence and it requires local partnerships.”

The number of telephone connections in India is expected to reach 1 billion by March 2015, the Telecom Regulatory Authority of India said in a report in April. The country had more than 846 million phone subscribers and 11.9 million broadband connections at the end of March, according to the regulator.

The increase in subscribers will require additional investments in telecommunications equipment of about $19 billion in 2015, and $34 billion by 2020, according to the regulator.

“Only about 12-13 percent of the demand for telecom equipment is being met by domestic production,” the regulator said in the report. “The demand supply gap and the imbalance between the exports and imports of the telecom equipment provide a good opportunity for manufacturing of telecom equipment in India both by the global” and Indian companies, it said.

Japan’s equipment makers now have a chance to supply gear for the broadband networks in India, Pitroda said. The nation plans to invest as much as 300 billion rupees in the next two years to expand broadband services, the adviser had said in July.

“The key challenge in India is scalability and affordability,” said Pitroda. “It requires new business partners, new ways of structuring to make money, and it requires a little bit of innovation.”

--Editors: Subramaniam Sharma, Suresh Seshadri.

To contact the reporter on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net


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