Telecom sector eyes bailout package from Centre

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The telecom sector has sought financial support from the government to deal with current crisis in the industry, created due to certain policy and regulatory changes.

telecom sector, package, centre, India

“We are ready for competition, but we need support from the government to look into the financial stress of the industry,” said Rajan Mathews, director-general, Cellular Operators Association of India (COAI) to an English daily.

Himanshu Kapania, managing director of Idea Cellular, points to the higher level of competition resulting in tariff war and reduced revenue, which has put the telecom sector in a fix.

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“It is difficult for the operators like Airtel and Idea to expand their network, while perhaps only Vodafone can match the expansion of RelianceJio,” states N K Goyal, a telecom industry observer.

The sector has also witnessed declining earnings before interest and taxes (EBIT) by sales ratio. The industry also faces the issue of higher spectrum charges, said Mathews.

However, what is worrying is that the share of the telecom sector in the non-performing assets has now increased. Though the total NPAs of the telecom sector in public-sector banks has fallen to Rs 2,335 crore in 2016-17 from Rs 3,465 crore in 2015-16, the share of NPAs of the segment within total NPAs of the infrastructure sector increased to 8.7 per cent in 2016-17 from 5 per cent in 2015-16.

“The incumbent operators will have to innovate to stay in the competition” said Sanjay Kapoor, former CEO of Airtel.

At the recent India Mobile Congress, the incumbent operators pleaded with Communications Minister Manoj Sinha to intervene and help the industry.

By Baishakhi Dutta

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