Falling rupee may force telcos to put 4G expansion plans on hold, say experts

KOLKATA: The rupee’s crash to an all-time low of Rs 70.09 to the US dollar could jack up the cost of imported network gear used in phone networks by nearly Rs 14,000 crore this fiscal, and also heighten financial stress levels of mobile carriers by way of increased foreign debt servicing obligations if the Indian currency slide isn’t arrested rapidly, analysts said.

Continuing weakness of the Indian currency, they said, could easily prompt telcos to put their immediate 4G network expansion plans on hold as a falling rupee could significantly inflate the annual network gear import bill for telcos.

“According to the telecom regulator, as much as Rs 1,400 billion of telecom equipment was imported in FY18, and if the same quantum of imports is required this fiscal, especially with telcos strengthening 4G infrastructure, the cost of imported telecom gear could rise by Rs 140 billion (Rs 14,000 crore) in FY19, with the rupee already down 10% versus the US dollar,” Hetal Gandhi, telecoms expert and director (research) at Crisil, told ET.

Phone companies are reckoned to meet at least 80% of the network gear needs through imports from foreign vendors such as Ericsson, Nokia, Huawei, Samsung and ZTE.