The record loss posted by Indian telecom services providers in the latest fiscal quarter seems to have jolted the powers that be into providing the sector with immediate life support.
The record loss posted by Indian telecom services providers in the latest fiscal quarter seems to have jolted the powers that be into providing the sector with immediate life support. The Union Cabinet on Wednesday decided to defer thousands of crores of rupees in dues from the telecom companies towards spectrum payments, freeing up some cash at the embattled firms. The spectrum payment installment dues have been decided to be deferred from the year 2020 to 2022, without any increase in the charges, Finance Minister Nirmala Sitharaman said at a press briefing to announce the Cabinet decisions. However, interest will be charged on the delayed payments, so as to keep the NPV (net present value) the same, she said.
Earlier this month, India’s largest incumbent telecom companies Bharti Airtel and Vodafone Idea put together posted a net loss of Rs 74,000 crore for the fiscal second quarter. The telecom sector stress is driven primarily by intense competition from Reliance Jio. This was further exacerbated by a recent Supreme Court ruling on AGR dues, adding another Rs 80,000 crore burden on incumbent telecom players Bharti Airtel and Vodafone Idea.
Bharti Airtel took a hit of Rs 28,450 crore on the account of provisioning for AGR dues in the second-quarter results. Meanwhile, Vodafone global CEO also expressed concern that the situation may drive the company towards the liquidation of India business — a statement that he later retracted. Earlier this week itself, all the three major telecom companies in India — Bharti Airtel and Vodafone Idea, quickly followed by Reliance Jio — decided to hike mobile service tariffs to viable levels. Meanwhile, Reliance Jio added 69.8 lakh users while Bharti Airtel lost 23.8 lakh and Vodafone Idea lost 25.7 lakh users on a monthly basis, according to the September telecom data released by TRAI on Tuesday.