Telecom companies pre-tax losses widen to Rs 381.53-bn in 2016-17

Telecom companies' pre-tax losses widened to a staggering Rs 381.53 billion in the 2016-17 fiscal from Rs 17 billion in the preceding year, Parliament was informed on Wednesday.

Also, 24 out of 50 companies reported losses before tax during 2016-17, the government said.

"Based on audited/unaudited information submitted by telecom service sector companies to TRAI, the profit-before-tax (PBT) for the telecom service sector companies has decreased from Rs 17 billion for the financial year 2015-16 to Rs 381.53 billion for the financial year 2016-17," Sinha said in a written reply to the Lok Sabha.

"The government ensures healthy competition in telecom sector. Recently, Trai has reiterated the regulatory principles of non-predatory, non-discrimination and transparency in tariff offers vide Telecommunication Tariff (63rd Amendment) Order, 2018 on February 16, 2018," Sinha said.

The note of minister's reply mentioned that the likelihood of a company getting into financial stress is high when the debt to Ebitda ratio is 4 times or above on a sustained basis.

As per data shared by Sinha, telecom major Airtel had the debt to Ebitda ratio of 3 times, Idea Cellular 5.8 times and Reliance Communications (RCom) 7.4 times.

In view of financial stress and market scenario, Idea Cellular opted for combining its wireless business with Vodafone and RCom decided to adopt strategic debt restructuring process.

Sinha said that bankruptcy petitions have been filed by Aircel and its subsidiaries before National Company Law Tribunal.

He said that during radiation audit by the vigilance arm of the Department of Telecom (DoT), it was revealed that most of the mobile towers of Aircel were switched off which led to non-generation of porting code and further causing great inconvenience of the customers.

"It has also been mentioned that the quality of service being offered to the customers is getting adversely affected... DoT has issued direction to M/s Aircel Limited on 19.03.2018 for compliance of various clauses of the agreement including those relating to customer services and quality of performance," Sinha said.