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Banks express concern over stress in telecom sector

A bank official said SBI's exposure to telecom companies is in the range of Rs 80,000 crore

Press Trust of India  |  New Delhi 

Telecom Tower

Four large that met an (IMG) today expressed concern over "stress" in the and flagged the possibility of loan default by operators. The IMG met officials from four leading -- State Bank of India, Punjab National Bank, and on financial difficulties being faced by the telecom industry, whose debt burden stand at a whopping Rs 4.6 lakh crore. "They (banks) say that the may be in stress and there can be defaults," sources familiar with the development said. The in the two-hour meeting talked about measures that can be taken to enhance liquidity. Sources further said that SBI's exposure to the is to the extent of Rs 80,000 crore. They added that the IMG may meet the once more but the date has not been finalised yet. The IMG, comprising officials from ministries of communications and finance, is meeting operators and lenders to discuss financial difficulties being faced by the industry, and measures that can be taken to ease the situation. Last month, SBI chairman Arundhati Bhattacharya in a letter to the telecom secretary had expressed concern over the stress in the reaching "unsustainable levels". "The stress in the sector has reached highly unsustainable levels after the entry of new players and launch of free services which led to erosion of topline and of the telecom service providers," the letter said. The letter said that the total of the sector on an annualised basis is Rs 65,000 crore which is "clearly unsustainable" for debt of more than Rs 4 lakh crore. The bank also sought immediate and large scale intervention to "stem the slide". It has asked for deferred payment liability for spectrum to be aligned to 20 years, rationalisation of GST rates, as also licence fee and spectrum usage charges.

First Published: Thu, June 15 2017. 01:14 IST