Investment World
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Telecommunications
Info-Tech
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Telecommunications
Telecom: A breather
Krishnan Thiagarajan
Budget 2002-03 has extended to the telecommunications industry the benefit of carryforward and setting off of past losses under Section 72A of the Income Tax Act.
Given the complex chain of companies created by telecom companies over the years, this proposal may set the stage for greater consolidation (through mergers and acquisitions) within the industry. Bharti Tele-Ventures, which recently completed its IPO, may benefit from the move.
The deferral of the zero duty regime from 2003 to 2005 under the WTO's Information Technology Agreement may provide domestic manufacturers of telecom equipment a much-needed breather. Such telecom equipment manufacturers as Himachal Futuristic, Shyam Telecom and ITI may benefit. The cellular handset prices are poised to decline as Budget 2002-03 has removed the countervailing duty of 16 per cent.
Even though the basic duty has been raised to 10 per cent (from 5 per cent in 2001-02), the net impact is positive and this will lower cellular handset prices in the near term. This will improve teledensity in a small way.
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