Top Indian telecom companies, multinational gear makers, and system integrators are eyeing the second phase of India’s ambitious yet controversial rural broadband project, BharatNet.
The Indian government promised support of up to Rs 19,041 crore ($2.57 billion) and greater clarity around viability gap funding (VGF), which resulted in greater interest from private companies.
Bharti Airtel, Vodafone Group Plc, Reliance Jio’s tower arm Infratel, STL, Cisco, Larson & Toubro, Hughes Communications, Indus Towers, RailTel Corporation of India, Power Grid Corporation of India, Hinduja Global Solutions and Tejas Networks are among 40 companies that have shown interest so far.
All these companies, looking to participate in the project through the public-private partnership (PPP) route, attended the pre-bid conference organised by the government to roll out the second phase of BharatNet.
The second phase is aiming to connect 3.61 lakh (361,000) villages through a fibre optic network by August 2023. The Indian government, through its Common Service Centre and state-run BSNL, connected nearly 1,00,000-gram panchayats or villages in the first phase of the project.
The pandemic has resulted in a greater need for connectivity across India and more so in rural parts of the country. The Economic Times reported that private players, especially telecom operators, see a “better business case” with a strong appetite for fast broadband services in rural India.
Industry experts told the publication that rural consumers now require reliable high-speed internet to access online education and health services, among others. The use cases can now potentially offer better returns on investments under the project for private players.
“Previously, there was less clarity around VGF with most of the (government) discourse being around facilitating Right of Way (RoW) clearances, “ STL Group CEO Anand Agarwal was quoted as saying by the publication.
The defined quantum of VGF (viability gap funding) available for each BharatNet project package for separate geographies is driving industry interest, Agarwal said.
However, companies like Hughes said that the VGF of Rs 19,041 crore is inadequate to cover the targeted 3.61 lakh villages (including GPs) across 16 states and sustain it for 30 years.
Under the BharatNet project, the Ministry of Electronics and IT has mapped the country into nine zones with the highest net worth criteria set for Uttar Pradesh East (Rs 1,206 crore/$162.97 million), followed by Punjab, Himachal Pradesh, and Haryana at Rs. 1078 crore/$145.68 each and Assam being the lowest at Rs 325 crores/$43.92.
Experts said that the net worth criteria specified for service providers might lead to the disqualification of several smaller companies from the second phase of the project.
Interestingly, the MeiTY’s Common Service Center network, which rolled out connections under the first phase of BharatNet, may not be eligible for bidding in many circles due to the high-net-worth criteria for the second phase. The CSC has a net worth of around Rs 300 crore/$40.54 million.