Reliance Jio impact: Telecom sector debt issues raise concerns; government calls urgent meeting

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Published: March 27, 2017 2:29:07 PM

The government revenue, lenders and shareholders in the Telecom market in India has been hit badly, and the reported debt that the sector is facing has been valued at Rs 3.5 lakh crore.

The government is reportedly very concerned at the debt of telecom companies against the spectrum instalments. (Image: PTI)

The government revenue, lenders and shareholders in the Telecom market in India has been hit badly, and the reported debt that the sector is facing has been valued at Rs 3.5 lakh crore. According to a report in ET Now, the government is very concerned at the debt of telecom companies against the spectrum instalments. The report said that the government is worried about the decline in licence fee receipts because of a fall in telecom companies’ revenue. Meanwhile, the cabinet secretary has called for an urgent meeting on March 29, with an aim to discuss the problems faced by the telecom sector. The meeting will be attended by Finance Minister Arun Jaitley and officials from the department of telecommunications.

Meanwhile, a few days ago, Telecom Minister Manoj Sinha had said that the government has no immediate plan to provide telecom companies with an option to buy spectrum annually. In a written reply to a question in Lok Sabha, he said, “The government has not yet made any plan to provide the industry with an option to buy spectrum every year.” The minister reportedly also said that the government has not yet decided to conduct another spectrum auction immediately. Back in February, then telecom secretary J S Deepak had said that the government is looking to make spectrum auction an annual event.

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Former Telecom Secretary JS Deepak while attending the Mobile World Congress in Barcelona, had said, “We are not worried if there is no demand for spectrum. We are interested in giving the industry an opportunity to buy spectrum.” This was only a day before he was removed from the post and named India’s next Ambassador to the World Trade Organisation (WTO).

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Following Reliance Jio’s announcement of a tariff war, other telecom operators like Airtel, Vodafone, Idea and Idea Cellular rushed to match its offers. Consequently, the revenues have fallen. While the offers have benefitted from the sharp drop in prices, the profitability of the telecom sector has been hit badly.

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