Telecom minister holds meeting with operators, says a report of inter-ministerial group would be out shortly
The government on Thursday said it will take corrective steps to ensure orderly growth of the telecom sector, after a meeting with the telecom service providers.
"Corrective steps will be taken by the government for ensuring orderly growth in this sector in terms of services to the common man," Union communications minister Manoj Sinha said after a two-hour meeting with telecom companies.
The final round of discussions between telecom service providers and the telecom ministry on the steps to ease out the financial stress of the sector concluded on Thursday.
The inter-ministerial group (IMG) is examining systematic issues affecting viability and repayment capacity in the telecom sector and its report will be out shortly, communications minister Manoj Sinha said after the meeting.
Key executives from all telecom companies, including Bharti Airtel, Idea Cellular, Reliance Jio and Reliance Communications, met Sinha, telecom secretary Aruna Sundararajan and other senior ministry officials. Bharti Group chairman Sunil Mittal and Mahendra Nahata from Reliance Jio were also present in the meeting.
According to sources, Reliance Group chairman Anil Ambani met telecom minister before this meeting started.
Sinha said, "The operators suggested a roadmap and talked about problems of financial stress. A decision will be taken soon."
Department of Financial Services and State Bank of India officials were also present in the meeting.
People close to the development said the meeting with operators on Thursday was the concluding meeting in the ongoing discussions over the financial mess of the sector.
As per industry estimates, total debt for the sector is at around Rs 4.5 lakh crore.
DNA Money was the first to report about the meeting of operators with the ministry.
Incumbents including Airtel, Vodafone and Idea have been facing pressure on their margins since the entry of RJio in September last year with free voice calls and data offers.
In its presentation to IMG, Airtel has said that during FY2012-17 it has invested Rs 125,000 crore towards total capex and spectrum costs. Out of this, Rs 46,000 crore were raised as debt and Rs 79,000 crore as equity infused from operating cash flow. Only Rs 4,000 crore of dividend was paid out of cash generated from the business while rest infused back as equity, as per the presentation.
However, RJio in an IMG meeting said that existing players must invest equity of up to Rs 125,000 crore in their business rather than asking the government for a bailout package. RJio had also alleged that debt to fresh equity infusion ratio was 32.8x for Airtel, 8.6x for Idea and 9.3x for RCom, according to people close to the development.
All operators favoured lowering of spectrum usage charges and the universal service obligation levy and then be phased out. Various levies like licence fee, spectrum usage charges and USO should be subsumed by GST.
Companies have also demanded a reduction of the licence fee to 5% from 8%, and spectrum levy at 1%. They also want the deferred payment liability of spectrum to be aligned to the life of the airwaves (20 years) with a moratorium of five years and repayment of 15 years.
...& ANALYSIS
- The inter-ministerial group is examining systematic issues affecting viability and repayment capacity
- RJio said IUC should be brought down to zero and licence fee should be subsumed in GST
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 "Manoj Sinha")
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