According to a Bloomberg report, license fee on adjusted gross revenue earned from households for providing fixed-line broadband services will be slashed to Rs 1 a year under the newly proposed plan. The report added that the government has asked certain ministries to share their view on the proposal, which will then go the cabinet for approval. Analysts said that fixed broadband can be a winner in the evolving post-Covid world, benefit as it will from work-from-home (WFH) culture. Fixed broadband penetration in India is currently very low at 6.1%, and this can easily more than double in next few years.
China has a Fixed broadband penetration of 86%
India is an under-penetrated wired market for both telephony and broadband. Fixed broadband subscribers have grown at a CAGR of 4% to 19 million against mobile broadband subscriber growth of 53.9% to 606 million in past six years. Proposal to benefit JioFiber. The move will allow Reliance Jio to further push its JioFiber broadband services in the country. It had launched JioFiber service last year, and is slowly expanding the service in various cities.
Airtel and Vodafone Idea also stand to gain from the possible change in policy.
ICICI Securities, in its recent note, said Bharti Airtel was well positioned to benefit from rise in fixed broadband, which contributes 3.1% to its consolidated EBITDA, and much more to FCF. ICICI said that mobile data being cheaper is one of the main factors behind the low penetration of fixed broadband: In India, subscribers use mobile data to access all content on internet due to generous allocation of 45GB a month in base packs. “…FBB is considered an alternate entertainment medium. In many countries, pay-TV is very expensive compared OTT, while in India pay-TV (cable and DTH) is cheaper than OTT. Thus, FBB+OTT viewing is a premium service in India, which costs over Rs1,400 per month in contrast to The Bloomberg report said that the estimated license fee for fixed-line broadband services is about Rs 8.80 billion a year.The proposal, if accepted, will result in a loss of Rs 59.27 billion to the Indian government. The report said that the proposal doesn’t include services provided to commercial users, including large corporations and business establishments.
