7. Financing Options
7.1  General
7.2  The Market Entry Options
7.3  Degrees of Interest and the Commercial Environment
7.3  Rural Funding Potential and Requirements

Basically, we have shown that rural telecommunications can and should be planned for commercial viability. Even though the profitability may not match that of urban areas, there are policy instruments which can enhance viability and provide incentives towards commercial operation.

A part of these policy instruments, various forms of cost and revenue sharing arrangements which are available through the pricing, licensing and interconnection mechanisms (discussed in Chapter 6), are, in fact, forms of financing, since they either enforce cost and revenue averaging between highly profitable and lower return services, or they increase the self-financing potential of rural operators through the provision of additional cash flows to them. They can contribute significantly to accelerated rural investment.

This chapter focuses on the various types of opportunity for direct investment and funding which have been identified in the study, and assesses their relevance and potential for the rural telecommunications market. The acceleration of rural telecommunications investment is dependent on the market entry options as well as the investment and fiscal environments.

The authors discuss market entry options such as revenue-sharing concessions (BTO; BOT), joint ventures and strategic partnerships; rural co-operatives; rural joint ventures and cost-sharing arrangements; competitive entry by an independent operator; an existing private telecommunications network operator, as well as cable TV operator.

Additionally, factors which influence private sector investors and financiers are reviewed and finally the authors explore the potential for establishing a range of special rural telecommunications funding mechanism and their requirements.