Minister to hold meeting with telcos on financial health

The financial health of the telecom sector has taken a beating after the launch of Reliance Jio

Telecom operators, which are facing severe financial pressure, have the ear of the government. According to sources in the industry, Telecom Minister Manoj Sinha’s office has written to telcos seeking to meet the owners or promoters to discuss the various representations they made to the government on the industry’s financial health.

The sources further said the Department of Telecommunications (DoT) had shared June 22 or 23 for the proposed meeting.

Before Sinha’s meeting, the inter-ministerial group (IMG), which was created to resolve the financial stress of the sector, will hold meetings with the executives of telecom companies. The operators have been asked to share details like total revenue, net profit, operational expenses, loans from foreign as well as domestic lenders, spectrum liability, among others, for the last three years.

An official in DoT said that after all these meetings, the government would get a clear idea about the problem and it might come out with some measures by the end of June.

The financial health of the telecom sector has taken a beating, mainly because of hyper competition unleashed by Reliance Jio, which commercially launched its services from September last year. 

Country’s top operator Bharti Airtel has seen its net profit slide for the past few quarters as is the case with Vodafone, Idea Cellular and Reliance Communications. In April, the Reserve Bank of India asked banks to set aside higher provisioning for the telecom sector, indicating the growing problem of financial stress in the sector.

Reliance Communications has defaulted on its payments and has got seven months breather to make repayments.

The telecom industry had outstanding debts of about Rs 4 lakh crore, incurred mainly on account of payments for spectrum, spectrum usage charges and other levies. The industry had earlier also written to the DoT, expressing concern over the financial situation.