'There Is Stress in Telecom Sector but Govt Will Settle It'
Bureaucracy Today|August 2017
'There Is Stress in Telecom Sector but Govt Will Settle It'

Minister of State for Communications Manoj Sinha met telecom industry leaders amidst a raging financial crisis in the sector saddled with Rs 4.5 lakh crores of debt due to the high licence fee, spectrum usage charges, the USO levy and the burden of paying spectrum auction dues in shortest possible time blocking the flow of funds for network expansion. Add intense competition to it unleashed by Reliance Jio with its free voice and data services bloodying the sector further as the incumbents’ net profits and revenue fall. The industry leaders (Airtel, Vodafone and Idea) and other small operators like Telenor, Aircel, RCom and TTSL are now demanding fiscal intervention from the Government through a lower licence fee (5%), SUC (1%) and a USO levy (3%). For a deferred payment for spectrum acquisition, the operators want an increase in the moratorium period to five years from the current two years and instalment payments in 15-20 years instead of in 10 years at present or till the validity of the licence period which the Inter-Ministerial Group (IMG) is currently looking into. In an exclusive interview with Bureaucracy Today after the IMG was set up, Sinha says he hopes the telecom sector will stabilise in six months.

Anjana Das

You have heard the telecom operators and know the ground realities of the sector. Do you think some intervention from the Government side is needed?

Of course, we will intervene in the matter. The Government is very serious. Let the IMG report come first. We will not take much time in arriving at a decision on it. I am hoping that the IMG report will come very soon. We will also expedite it at the earliest.. Certainly there is a stress in the telecom sector. The RBI and the SBI have also expressed their opinions on this issue.

The telecom sector has seen a very golden period as it evolved around. Suddenly it is witnessing a stage where the operators are in the danger zone of defaulting in paying their bank loans. Has this industry come to a stage of halted growth where some amount of disarray has set in due to the entry of new operator(s) and some checks and balances should be there to avoid the present stress situation?

There is a stress in the telecom sector. Everybody has heard the opinions of the State Bank of India and the Reserve Bank of India. The story of the sector was a great success. One thing I have noticed is that whenever a new entrant came in the telecom field there had been some effect. In 2003 also there was small turmoil like this, but it was being settled within six months or a year. I am hopeful again it will be settled within the regulatory framework in the coming six months.

Is there any need of a complete bailout package as was offered in 2003 when a revenue share deal was given to the operators? Is such a huge policy shift strategy the need of the hour?

The 2003 scene was different and the platform was also different. The 2017 platform is entirely different. I don’t think we can compare both the situations. The Government’s intention is very clear. The successful story must continue.

The root cause of the telecom field problem is competition. The level and method of its operation look like being responsible for the current problem. Is there any thought of the Department of Telecommunication (DoT) to stop such kind of competitive behaviour? Every operator can’t give free service backed by a financially strong parent.

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August 2017