Budget 2012-13: KPMG sees neutral to mildly positive impact on telecom

By Jaideep Ghosh, Partner, KPMG Advisory

The Union Budget 2012 has a neutral to mildly positive impact on the Indian telecom sector. Overall emphasis on strengthening the rural economy and inclusive growth will have a positive trickle down impact on rural penetration of telecom services. Inclusion of telecom tower infrastructure in the viability gap funding and incentives for solar power is a positive move towards strengthening of rural telecom infrastructure; however considering that impact of USO to enhance rural tele-density has been fairly limited so far, the real impact of the measures announced will be keenly observed.

Exemption of customs duty on parts of mobile phone memory cards is unlikely to result in a significant reduction in device prices and penetration, and likely to have a neutral impact on device penetration. There were no major announcements on broadband services, which the industry was expecting. However many of these areas are likely to be addressed by the forthcoming National Telecom Policy.