Ciencia

Panel on telecom sector health to meet again next week

Panel on telecom sector health to meet again next week

A section of the panel looking into the telecom sector's health feels large scale policy intervention may not be needed given green-shoots of financial recovery seen in the April-June quarter, a senior government official said, drawing protests from the industry.

The inter-ministerial group - constituted to look into the financial stress in telecom sector and give its recommendations - met here on Friday to discuss the issues.

The IMG's next meeting could be held on August 16 and there is a possibility that the report may be signed on August 17. Emerging from the one hour meeting, the source who participated in the meeting said that the general thinking in the IMG is that big bang policy intervention may not be required given the "green shoots" that are now visible in the industry.

"We have the demands of the industry on the table but what is required or not required is the question", the official said.

However, the source said that a final decision on the matter has not been taken and further discussions will be required. If approved such proposed relaxation will improve the cash flow of telecom companies.

The telcos may be given 16 years instead of 10 years for such deferred spectrum payment, another member of IMG said.

Other measures included allowing spectrum to be used as collateral for accessing loans, a move that was allowed by the Reserve Bank of India (RBI) back in 2012, but was opposed by the telecom department at that time.

Economic survey expressed distress over the rise of non-performing assets (NPAs) in the telecom sector after a downfall in the revenue of the operators due to the tough competition brought in by the new entrant, Reliance Jio.

For this reason, Credit Suisse estimates that the share of telecom debt owed by companies with an interest coverage (IC) of less than 1 has more than doubled since late 2016, climbing above 55 per cent, with an associated vulnerable debt of Rs 1.5 lakh crore.