Telecom minister to meet operators in Delhi

Telecom minister Manoj Sinha will meet promoters of service providers on Thursday in New Delhi to take stock of the concerns and challenges of the sector under financial stress, an industry body official said today.
"The minister wants to hear from operators individually, what they see as particular challenges although they have common set of challenges," Cellular Operators Association of India (COAI) Director General Rajan S Mathews told PTI here.
"...Issues highlighted by individual operators and then take a concerted view as to what can be done at an industry level," he said.
COAI has Bharti Airtel, Vodafone, Idea Cellular and Reliance Jio as its members.

The operators would discuss the concerns over the increased GST (goods and services tax) rate, debt-burden of the sector, the need to consider recommendations of TRAI of lowering of spectrum user charges to one per cent and reduction in licence fee to three per cent, among other issues, he said.
Mathews said the government has finally focused on addressing financial woes of the debt-ridden sector.

"Obviously, banks have raised the issue, industry has raised the issue. Potential (loan) default situation is arising," Mathews said, noting that the TRAI and Inter-Ministerial Group (IMG) have already met with operators.
He said the sector is reeling under a debt burden of Rs 4.6 lakh crore.

"The debt held by the government is fairly significant. Clearly, a good set of initiatives from the government will definitely help the industry," he said.
Mathews said the GST rate for telecom services at 18 per cent would negatively impact the industry.
At present, telecom consumers are charged 15 per cent in the form of tax and cess over their phone bills, according to industry officials.
Mathews indicated a scenario where companies take a revenue hit by absorbing additional cost either fully or partly, or passing it on to consumers leading to increasing cost of services, which also results in reduced consumption.

"Two impacts (of GST at 18 per cent) -- one is the industry absorbing a fair part of that cost; that's going to negatively impact the industry given the financial condition of the industry. Second option is to pass it on the consumers," he said.
Mathews said 80 per cent of the consumers are "very, very sensitive to price," adding, as much as 46 per cent of customers go for multiples of Rs 10 mobile recharge and "GST going up from 15 per cent to 18 per cent is material for them."
But he said it is hard to tell the extent of increase in telecom services once the GST regime comes into force.

"That will depend on the competitive intensity. Somebody might decide to absorb 100 per cent, some might absorb smaller percentage. If you pass it on, it will lead to reduced consumption," Mathews said.