IMG discusses various options for stressed telecom sector

The inter-ministerial group (IMG), formed to address the stress in the telecom sector, on Friday undertook an internal meeting to discuss and finalise its report.

During the meeting, the panel explored various options like extending the deferred payment schedule, change in interest rate among others. However, no final decision was taken and another meeting is likely on August 16 to further deliberate on the matter.

According to sources, a few members raised the point that financial health of the industry has started to improve and it can be seen with the numbers reported by operators in the first quarter. However, not everybody in the meeting agreed to it.

The panel is likely to come out with its recommendations before August 27. The recommendation of the group will be placed before the Telecom Commission and ultimately to the Cabinet.

The panel is also debating if some relief can be given to operators in terms of licence fee, which currently stands at 8 per cent of telcos adjusted gross revenue.

As per sources, extending the deferred payment schedule to 16 years, cut in interest rates and converting the PLR (prime lending rate) into the MCLR (marginal cost of funds-based lending rate) are among the measures being considered by the IMG, which has seven members, including officials from the Department of Telecommunications (DoT) and the finance ministry.

The outstanding debt in the industry is pegged at Rs 4.5 lakh crore, incurred mainly on account of payments for spectrum, and other levies. Ever since Reliance Jio entered the telecom space, country's top operator Bharti Airtel has seen its net profit slide. It has been the same for others, including Vodafone, Idea Cellular and Reliance Communications.

In April, the RBI had asked banks to set aside higher provisioning for the telecom sector, indicating the growing problem of financial stress in the sector.