Idea, Airtel talk of poor financial health, seek government aid

Kapania said the IUC move by the regulator will slowly erode 2G and 3G connections in the industry , which will adversely impact rural connectivity. “Trai has pushed us to a level that only one technology survives and overall technolo gies will close down,” he said.
Terming the regulatory and financial issues being faced by the sector as the “elephant in the room that no one is talking about”, Kapania was particularly forceful on the IUC cut amidst firm spectrum prices and high levies like licence fee and GST as big constraints.
“No industry can survive the drastic fall in voice and data tariffs that have plunged to “below cost” levels over the last one year,” Kapania added. Gopal Vittal, Bharti Airtel’s MD and CEO for India and South Asia, also had similar views. “Taxation on the industry is very high. It is in the range of 29-32%. Spectrum cost is one of the highest and tariff being one of the lowest. All of this needs to change to realise the dream and vision of Digital India.”
Vittal put the debt of the industry at about Rs 4.5 lakh crore and return on capital at about 1% and “all of this is a problem to acknowledge”. While acknowledging that the government is involved in easing norms for doing business, Vittal said that the industry is facing problems on various fronts. “We find the mergers and acquisitions policy , while it is out there, the pace at which it happens is a challenge. And all of this I think needs to be streamlined,” the Airtel CEO added. Also, he highlighted issues concerning laying of fibre. Telecom companies find it to be a “painful process” to find access to government buildings when they want to lay down fibre. Idea Cellular and Bharti Airtel on Wednesday said that the telecom industry is under a severe financial stress and needs support of the government to take up investment and expansion plans.
Himanshu Kapania, CEO and MD of Idea Cellular, said that the recent cut in interconnection usage charges (IUC) by regulator Trai will deplete the industry of investable funds, and sought urgent intervention by the telecom ministry through relief measures. “The announced IUC will further deplete the industry of its investable funds beside creating inter-operator imbalances of high traffic asymmetries. The fault-lines are already evident with the industry going through stress,” Kapania said at the India Mobile Congress.
He said the government’s revenue collection from the telecom companies will be hit adversely . “This will also impact the long-term financial structure of the industry .”
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