Banks hesitant to lend to the telecom sector increasing the trouble

Banks hesitant

The woes of the industry have widened as the AGR dues have been asked to be paid by the sector towards leftover tariffs and also the thing that is being considered by the regulating body is to impart the dues of the now-bankrupt companies that were taken over by other entities and haven’t cleared their dues. The regulatory knock has come at the telecom industry’s doorstep at a very unpleasant time as the industry is reeling from the stresses incurred over the past three years of tariff wars and the regulatory compliance which has mandated the industry to fill in the government’s coffers to the tune of 2 lakh crore of which the main quantum has belonged to the oldest playing names in the industry.

The new headache for the industry is because of the call drop charges that the industry owes to the government for the past year and it is evaluated at about Rs 3.2 crore from various players but the biggest piece of the pie belongs to Vodafone-Idea with a quantum of Rs 1.76 crore and followed up with AirTel at Rs 43 lakhs and a meager sum of Rs 6 lakhs for Reliance Jio. The banks have been hesitant since a lot of time to extend loans to the telecom sector to repay their debts as they have failed to show profitability in the face of a tariff war that has been on-going since 2016 with Reliance Jio for it offered free services due to the vastness of the resource pool it has access to on the back of being a part of the conglomerate that operates Asia’s biggest refinery at Jamnagar, Gujarat.

The telecom sector needs fiscal and monetary stimulus, and it is high time that it is included in the Indian growth story scheme or else the race will be two-pronged with at least one of the three players calling its cards, and that will be a duopoly which is a comparative loss to the consumers of the sector.