Inter-ministerial group to meet telecom companies this week on industry’s financial woes

The industry’s key demands include reduction of licence fee to 5 per cent (from 8 per cent), and flat 1 per cent spectrum levy.

By: PTI | New Delhi | Published:June 11, 2017 3:21 pm

The inter-ministerial group, comprising officials from ministries of communications and finance, is set to meet telecom operators this week to discuss the financial difficulties being faced by the industry and measures that can be taken to ease the situation. The first of these meetings kick-off on Monday, with the group slated to meet senior executives from Reliance Jio, Reliance Communications, Tata Teleservices and Aircel, sources told PTI.

Over the course of the week, the IMG will also meet other operators including Bharti Airtel, Vodafone and Idea Cellular, as well as top officials of telecom PSUs Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd.

The operators will be asked to suggest measures which can be taken by the government to address financial woes of the industry that is reeling under revenue and profitability pressures as well as mounting debt.

On June 15, the Telecom Regulatory Authority of India too is scheduled to meet the operators to discuss their financial pain and seek views on a policy prescription. Investors and analysts will be keenly watching out for cues from these meeting, as the parleys will set the tone for relief measures that could be in the offing.

The industry’s key demands include reduction of licence fee to 5 per cent (from 8 per cent), and flat 1 per cent spectrum levy. The industry also wants the deferred payment liability of spectrum to be aligned to the life of the airwaves, that is, 20 years with a moratorium of five years and repayment of 15 years.

The telecom sector has a debt of Rs 4.6 lakh crore. A recent investor presentation by Reliance Communications warned that the sector could be staring at 30,000 to 40,000 job losses over the next 12-18 months.

Incidentally, India, with over 1.16 billion mobile users, is the second largest telecom market in the world after China. But telecom operators here lament they are facing pressure on income, profitability and other financial metrics on account of competition intensified by the entry of Mukesh Ambani-owned Reliance Jio.

Last month, Idea Cellular reported a consolidated loss of Rs 325.6 crore in the three-month period ended March 2017, hurt by the severe tariff war. India’s largest telecom operator Bharti Airtel too reported its lowest quarterly profit in four years as net earnings plunged 72 per cent in January-March, hit by “sustained predatory pricing” by Jio.

Debt-laden Reliance Communications, that has faced a slew of rating downgrades over the last few days, reported its first annual loss since its inception at Rs 1,283 crore for the fiscal ended March 2017.

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