Mega fund raising in telecom shows promoters' seriousness despite structural issues: COAI

The massive fund raising exercise in telecom sector via rights issue underpins the seriousness of promoters and their continued faith in fundamentals and dynamics of the market despite "adverse circumstances" and "structural issues", that need to be urgently fixed, COAI has said.

According to COAI Director General Rajan S Mathews, it shows the seriousness of the players to continue to fund their operations adequately.

"Companies are facing severe economic turbulence from issues that could have been fixed by the government, viz 30 per cent levies and taxes that the government continues to extract from the industry. Plus the debt factor and its overhang," Mathews told PTI.

The industry has taken a responsible call to infuse fresh funds in "some very adverse circumstances", he noted.

"This, to my mind, is a responsible decision in some very adverse circumstances...responsible decision of promoters putting in money, showcase their faith in future of the industry and their ability to continue to operate...If you look, the last two years should not have given anybody that high level of confidence in wanting to do this," he said.

Cellular Operators' Association of India (COAI) hopes that the new government post election, would set out a clear roadmap to ease the burden of levies on the telecom sector, and issues including cut in licence fee and spectrum charges would be taken up at the earliest.

Citing the 'National Digital Communications Policy 2018' which prioritises universal coverage rather than revenue maximisation, Mathews said, "we understand, that the Prime Minister's Office has asked all departments to give 100 day action plan, and I believe that any action plan for the telecom department should clearly indicate this among the critical parameters."