India: Financial health of Telecom sector

January 22, 2018

Health of Telecom Sector:

The telecom sector has made some noteworthy progress in the past few years and this progress can be attributed to the policy decisions by the Department of Telecommunications. It has undertaken some notable reforms and initiatives that have helped the telecom industry to grow and develop. As per the recent press release[1]

regarding ‘Year End Review-2017’ by the Ministry of Communications, the total telecom connections in the country grew 33.07% by reaching the figure 1194.99 million in 2016-17 from 898.02 million in 2012-13.

As a part of the Digital India Campaign, key initiatives were undertaken by the Government for the growth of internet and broadband in the country. As per a recent press release[2]

, the number of Internet subscribers (both broadband and narrowband put together) was 422.18 million at the end of March 2017 and increased to 431.21 million by the end of June 2017. Further, as per the press release, the FDI equity inflow in the telecom sector was USD 6.08 billion in the first half of the financial year which was in excess of four times that the sector had observed during the financial year 2015-16 and relatively a 10 percent increase was witnessed than that during 2016-17.

However, as per reports


[3], the financial health of the Indian telecom sector has been stressed to cope with a cumulative debt estimated, at INR 4.6 lakh crores, against revenues which have been dropped to less than INR 2 lakh crores. Further, an inter-ministerial group was constituted in 2017 to provide recommendations regarding the same.

Telecom Commission’s meeting on January 9 and COAI response:

The Telecom Commission met on January 9 to discuss and deliberate over the recommendations provided by the inter-ministerial group in August, 2017 and discuss a relief package that can be made for the sector.

Further, it has been reported in the media[4]

that the Cellular Operators Association of India has welcomed the decision to allow 100 percent Foreign Direct Investment through the automatic route. The association also welcomed the Telecom Commission to approve the Inter-Ministerial Committee’s recommendations regarding the financial health of the telecom sector.

However, Rajan S. Mathews, the Director General of the Cellular Operators Association of India, was of the opinion that “since only the spectrum payment tenure is being extended, no real tangible financial benefit will accrue to the industry.”[5]

Thus, concerns still ponder over the financial health of telecom sector in India.


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