DoT agrees to create SPV for rural broadband network rollout

25 Oct 2011

India’s Department of Telecommunications (DoT) has reportedly accepted the position of the Ministry of Finance (MoF) that state-owned telco Bharat Sanchar Nigam Ltd (BSNL) should not be the sole company tasked with the rollout of a national broadband network. According to the Indian Economic Times, the government has decided that the INR200 billion (USD4 billion) project will be undertaken by a special purpose vehicle (SPV) with equity participation from BSNL and fellow state-owned telco Mahanagar Telephone Nigam Ltd, as well as other public sector companies such as RailTel, Gail and PowerGrid. Private players meanwhile may also be called in to contribute to the venture at a later date, with the DoT in its proposal to the Union Cabinet noting: ‘This stage could be considered at any point when it is felt that it would add value to the objectives of the programme.’ In the communication to the Cabinet the DoT also confirmed that it has already formed both a high-level committee (HLC) and an advisory body to oversee the project, stating: ‘The project implementation team consisting of members of BSNL, PowerGrid, RailTel, National Informatics Centre and C-DoT is presently looking after various preparatory activities such as geographic information systems mapping, finalisation of network design. The team has been entrusted with the task of undertaking the preparatory activity for project execution and establishment of [an] SPV. [The] SPV formation will be initiated soon after Cabinet approval.’

Under the project around 1.1 million kilometres of fibre-optic cable will be laid to connect more than 250,000 gram panchayats (local assemblies) across the country. July 2011 saw the announcement that by communications minister Kapil Sibal that the Telecom Commission, the apex decision making body of the DoT, had approved the proposals for the scheme, but delays followed after the MoF raised concerns regarding the body that would oversee the project. While the DoT agreed with the MoF that a SPV should be created for managing the fibre network after it was constructed by BSNL, the latter demanded that the SPV in fact be entrusted with both the rollout and subsequent network management.