Brace for a hike in broadband, electronic goods prices

KOLKATA: The rupee’s free fall to a lifetime low at . 68.85 to the US dollar could crank up India’s national broadband network rollout costs by nearly 30% to over Rs 27,000 crore, a senior official at Bharat Broadband Network Ltd told ET.


State-run BBNL, which is implementing the national broadband venture to boost India’s high-speed internet penetration levels, is likely to shortly seek Telecom Commission’s approval to raise the project cost that is currently pegged at Rs 21,000 crore, this person told ET.

BBNL is a special purpose vehicle controlled by the telecom department (DoT). Telecom Commission is the highest decision-making body in the communications ministry. The TC’s approval is needed since the venture will be entirely financed by the Universal Service Obligation Fund -- an independent DoT wing that subsidises rural telecoms infrastructure ventures.

“The BBNL leadership is reviewing the cost of the national fibre optic network (NOFN) rollout, which was benchmarked to the rupee-dollar exchange rate prevailing in first quarter , 2011,” the executive said. “The rupee has since crashed by over 33%, and we may soon approach the Telecom Commission to relook at costs if the escalation seems unreasonable” .

While BBNL has to give preference to domestic telecom gear suppliers since NOFN is the government’s biggest communications venture, it expects a significant import requirement since local manufacturers do not have the ready wherewithal to meet the massive network equipment for the pan-India broadband rollout across 2.5 lakh villages over the next one year.

The continuing rupee slide is expected to inflate the project imports bill linked to the procurement of optical fibre cables, electronics for transporting multimedia signals and raw materials for building ducts across the country. However,another company executive said that BBNL would approach the TC only after the tendering process.