28 firms vie for Rs2,400 cr rural phone project

28 firms vie for Rs2,400 cr rural phone project
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First Published: Tue, Feb 27 2007. 12 22 AM IST
Updated: Tue, Feb 27 2007. 12 22 AM IST
Twenty-eight companies, including major telecom operators and infrastructure providers, have bid to participate in a Union government scheme that aims to extend mobile-phone services to underserved rural areas.
Leading cellular service firms Bharti Airtel, Reliance Communications, Tata Teleservices and Bharat Sanchar Nigam Ltd are among the bidders, according to government sources.
The project, costing up to Rs2,395 crore, will be financed by a ‘universal service obligation’ or USO fund, raised by taxing phone-service companies operating in India 5% of their annual revenues. The fund is designed to extend the phone network to areas not covered by private operators.
The companies, government sources said, have bid to set up some 7,800 towers in some 500 Indian districts in the next one year. The project aims to piggyback mobile-phone networks to improve rural teledensity beyond the current 1.8%.
The scheme was mooted by the department of telecommunications after landline operators failed to dip into the USO fund to finance expansion of their networks to rural areas.
The USO fund will have an unused corpus of Rs9,500 crore by the end of this year, according to department estimates.
The response to the tender was overwhelming, said an official at the department’s USO fund division, surprised by the response to the first-ever tender invitation to the mobile sector. The bids are set to be opened on Tuesday and “we intend to sign the contracts with the service providers and the tower companies by the end of March”, said the official who did not want to be quoted.
Under the scheme, a maximum subsidy of up to Rs323 crore a year will be provided for a period of five years to operators or other telecom infrastructure companies, setting up towers in locations identified by the department.
The fund will also support mobile-phone service providers who choose to launch services using the infrastructure set up. Such operators will receive a subsidy of up to Rs156 crore annually for five years.
The operators will have to share the towers and other infrastructure with up to two other companies.
The department has also mandated that the networks be ready within a year of the award of the contract and that they be enabled with datacapability.
It also hinted that the same infrastructure would be used for the roll-out of wireless broadband technologies in these areas in the future.
“Despite rapid and steady growth in teledensity, the urban-rural divide has continued,” the USO administrator’s office said in a statement, explaining the move. “Current rural teledensity is about 1.84%, compared to urban teledensity of 49.53%. Mobile services, which have brought about a revolution in the urban areas, can be effectively used to provide telecom services to people in the rural and remote areas also at affordable and reasonable prices.”
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First Published: Tue, Feb 27 2007. 12 22 AM IST
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