India Ratings and Research (Ind-Ra) believes that setting up an optical fibre network across the country, also known as BharatNet, through the public private partnership (PPP) model is a unique growth opportunity for the private infrastructure sector. It also is a harbinger for the adoption of the PPP model in more such distributed asset classes. Risk allocation in concession agreements is critical for the success of the PPP model and availing debt capital. Nature of risks will differ for BharatNet compared to traditional infrastructure assets because of the widespread geographical area of the project, technology involved, competition in the telecom space and associated risks.
Demand-linked Revenue: Revenue will consist of the fees collected by allocating bandwidth to users, by leasing the unused fibre and sale of broadband connections. Demand projections for fixed line broadband services will be an important part of the analysis. The telecom industry is transitioning towards data-centric models compared to voice-centric models historically. Also, the low penetration of broadband in rural areas signifies the unmet demand which BharatNet can meet. The existing broadband penetration is predominantly through wireless connections. Price, reliability and quality of connectivity will determine the attractiveness of BharatNet for consumers.
Additional information is available at www.indiaratings.co.in.
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