Beleaguered telecom operators will meet an inter-ministerial panel this week in a bid to push for a bailout package aimed at reviving growth for the sector.

Declining profits, mounting debt and highly priced spectrum acquisition have put tremendous pressure on the operators even as they are required to increase investments to meet the massive uptake in data consumption.

The inter-ministerial panel has been set up to look into the woes of the telecom sector and to come up with policy recommendations. The panel has met the operators individually over the last ten days and is expected to hold second round of meetings this week. The panel will meet representatives of Tata Teleservices, MTS, Aircel and Reliance Communications on June 12 . Meeting with Bharti Airtel, Vodafone India, Idea Cellular and Reliance Jio Infocomm has been scheduled for June 15 and BSNL and MTNL on June 17 .

Major demands

According to industry sources, there are essentially three major demands from the operators — reduce overall levies on the telecom sector, extend the time period for payment of spectrum charges and to exclude non-telecom revenues while determining adjusted gross revenue.

“The industry has never seen such financial pressure on the operators. FY17 was the first time since inception that the industry’s revenue and EBIDTA declined. The combined revenues of the industry went down to an estimated ₹2,10,000 crore in FY17. Further, in FY18, revenue is estimated to decline further by ₹25,000 crore. This is compounded by the fact that the total debt for the industry is pegged at nearly ₹7 lakh crore, including ₹2.95 lakh crore of deferred spectrum payments to the Centre,” said market analysts. The entry of Reliance Jio with free voice calls has put further pressure on the operators. Voice Revenue per minute (RPM) has fallen by 25 per cent between Q2 FY17 and Q4 FY17. Data Revenue per MB (RPMB) has also fallen 40 per cent during this period. “Return on capital has trickled down to meagre 2 per cent which is lowest among all infra sectors and much less than the bank deposit rates,’ said Punit Garg, President, Reliance Communications.

As a result of the financial pressure, the industry is going through a consolidation. While Airtel has acquired spectrum from the likes of Tikona and Telenor, Vodafone and Idea are looking to merge their operations. Reliance Communications is also in the process of merging its wireless operations with Aircel and MTS. RCom has been hit harder due to delays in closing the tower asset sale. Lenders to RCom have now agreed to give the company 7 more months to repay its debt of nearly ₹45,000 crore.

Related Topics