India’s telecom sector is facing a fresh spike in operating expenses after state-run oil marketing companies sharply increased the price of bulk diesel supplied to industrial users. Indian Oil Corporation and its peers have raised industrial diesel rates by around Rs 22 per litre, taking prices in Delhi from approximately Rs 87.6 to about Rs 109.6 per litre, a rise of more than 25 per cent. The increase has been triggered by surging global crude prices amid the conflict in West Asia and the war involving Iran. Retail prices of regular diesel, however, remain unchanged, concentrating the impact on large bulk consumers such as telecom tower companies, railways, and manufacturers.
Telecom infrastructure providers rely on diesel generator sets to keep mobile towers running in areas with no grid connectivity or frequent power cuts, making fuel a significant component of network operating expenditure. Industry executives and analysts estimate that a 10 per cent rise in diesel costs can add roughly Rs 6 00 to 700 billion annually to the sector’s power and fuel bill. They warn that the latest, steeper hike could push network operating expenditure up by several percentage points if fully absorbed by operators. Power and fuel already account for a sizeable share of tower operating costs, and the extent to which infrastructure providers can pass on the increase to mobile operators depends on existing contracts.
The fuel shock comes even as the Digital Infrastructure Providers Association has urged the government to ensure priority electricity supply for telecom sites and ease constraints on alternative fuels, in order to safeguard connectivity and support the ongoing 5G rollout. The industry argues that sustained pressure from higher energy costs may strengthen the case for tariff rationalisation in the coming months, even as operators continue to accelerate energy efficiency measures and reduce dependence on diesel at tower locations.
