NPAs of telecom sector rises: Economic Survey

Eloi Lecerf
Agosto 12, 2017

"...what's worrying is that the share of the telecom sector in the non-performing assets (NPAs) has now increased", the survey said. 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.

The recommendation of the group will be placed before the telecom commission and ultimately to the Cabinet.

"We have the demands of the industry on the table but what is required or not required is the question", the official said. If approved such proposed relaxation will improve the cash flow of telecom companies.

However, sources further added that, "The panel is likely to give some relief in form of increased period for payment for spectrum loans to 16 years from the current 10 years".

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

Other proposals being discussed include convergence between DoT guidelines and RBI guidelines on the issue of allowing spectrum as collateral, the official said. An inter-ministerial panel to examine the financial woes of the telecom sector held several meetings in June with stakeholders, including telecom operators and banks.

The entry of Reliance Jio on September 5 a year ago has forced incumbent telecom firms to cut voice and data tariffs and the stiff competition, price war and reduced revenue has trapped telecom into a highly leveraged sector, part two of the Economic Survey for 2016-17 said.

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.

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