Huge Generally, a ground base tower cost

Huge capital requirement’s – The cost of equipment is estimated about 35 to 40 percent of the telecom operator’s total expenditure, while the balance is counted for by passive infrastructure. – Every existing player in the industry has invested close to 250 to 400 billion to create the cellular infrastructure with a total of 7,36,654 towers all over country. Generally, a ground base tower cost around 25 to 30 lakhs where as a roof based tower costs around 15 to 20 lakhs. – For the maintaining of one tower is around between 60000 to 75000 per month. – To rent a tower, it will cost around 50000 to 70000 for active network. – The monthly expenditure for a TSP (telecom service provider) will be around 85,000 to 1,10,000 (Rs). Declining ARPU (average revenue per user) – Well as the market is growing and maturing, market players spread their roots to urban areas also where the consumers ARPU is limited to 5 to 6$ a month. So, it will be very thought and challenging for the new entrant to manage such a low level of revenue per user. Building or access optical fibre network – Well the largest optical fibre has been built by BSNL as it is government operated. – The private sector players such as bharti, reliance and idea have also constructed optical fibre cable network but mainly in cities where as reliance already started to build up optical fibre network in urban areas also. – So, for a new entrant it will not be easy and cost effective. Government and legal barriers – Licensing policy: The government has provided six new 2G licenses to telecom operators at a fee of Rs. 1650 crore in 2008 on first come first serve basis. This distribution took place after seven years of the previous distribution. In recently held 3G licences auction all the incumbent private players managed to get licenses for 9-13 circles. It has been evident that the delay in the 3G auction, auction procedure and the head start given to the incumbent public players has caused lot of unrest in the industry. Government licensing policies, and a 74% FDI cap in telecom sector has made industry unattractive to new entrant and investors.

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