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Thursday, December 12, 2019

‘Don’t want any company to shut operations’: Sitharaman on telecom financial stress

The statement comes days after growth in bank credit to industries slowed to 2.7 per cent in September — the lowest in the last 12 months.

By: Express Web Desk | New Delhi | Updated: November 15, 2019 9:07:10 pm
Finance Minister Nirmala Sitharaman addresses a press conference in New Delhi. (PTI Photo)

Allaying any apprehensions regarding mounting financial stress in the telecom sector, Union Finance Minister Nirmala Sitharaman Friday said the government doesn’t want any company to shut operations. Telecom companies Vodafone and Bharti Airtel posted a combined loss of Rs 73,967 crore for the September quarter of fiscal 2019-20.

“We want no company to shut their operations. We want everyone to flourish,” the finance minister was quoted as saying by PTI.

Two leading telecom companies — Vodafone Idea and Bharti Airtel — came out with a huge combined loss of Rs 73,967 crore for the September quarter of fiscal 2019-20, threatening the ability of the two firms to “continue as a going concern”.

Vodafone said in a statement, “It is to be noted that our ability to continue as going concern is dependent on obtaining the reliefs from the Government and positive outcome of the proposed legal remedy.” Vodafone Plc’s CEO Nick Read said on Tuesday that the situation in India had reached a critical stage, and had added, “If you’re not a going concern, you’re moving into a liquidation scenario — can’t get any clearer than that.”

Bharti Airtel on Thursday posted its biggest consolidated net loss at Rs 23,045 crore for the July-September quarter on the back of provisions for the licence fee and spectrum usage charge (SUC) based on the definition of the Supreme Court of what constitutes AGR.

Meanwhile, Sitharaman said the government is set to hike bank deposit guarantee insurance from Rs 1 lakh and legislation to regulate multi-state co-operative banks can be introduced in the winter session of Parliament.

Her statement comes days after growth in bank credit to industries slowed to 2.7 per cent in September — the lowest in the last 12 months. This is after having recovered earlier this year to hit a four-and-a-half-year high of 6.9 per cent in April 2019. Data released by Reserve Bank of India showed that gross bank credit, too, expanded by just 8.2 per cent in September — the lowest in 22 months. Gross bank credit witnessed double-digit year-on-year growth in each of the months between April 2018 and July 2019.

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