Prashant Singhal, partner, telecom industry, Ernst & Young:

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Prashant Singhal, partner, telecom industry, Ernst & Young:

February 15, 2005

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Growth prospects of the telcos are, to a large extent, dependent on their capacity to raise additional capital for investment. The government's decision to hike the FDI sectoral cap is a welcome step as it will allow domestic players to access international capital. Several foreign telecom companies, particularly from Europe and Asia-Pacific, which recognised the potential of the Indian market but were reluctant to invest in a country where they were not allowed direct majority control, are expected to firm up their India plans shortly. Moreover, the opaqueness that had crept into the ownership patterns of some telecom companies as a result of the circuitous route being followed to circumvent the 49 per cent limit can now be done away with. With an expected growth of almost 100 million subscribers, India would need investments of nearly $10 billion in the telecom sector in the coming years.