The Inter-Ministerial Group (IMG) examining the financial stress in the telecom sector is expected to submit its report in 20 days, Telecom Minister Manoj Sinha said on Wednesday during the Lok Sabha Question Hour.

Acknowledging that the telecom sector is going through financial stress, he said action will be taken on the basis of the report.

He said the group was constituted to examine the systemic issues affecting viability and repayment capacity in the sector, and furnish recommendations for resolutions of stressed assets at the earliest.

The group will also look into policy reforms and strategic interventions for the telecom sector.

Threat of loan defaults

Amid intense competition, margins in the sector have been squeezed and there are also fears of defaults on loans taken from banks.

The group, in June, had held extensive dialogue with all telecom players as well as large banks to discuss the industry’s financial difficulties and suggest measures to ease the situation.

In May, the Reserve Bank of India had asked banks to immediately review their exposure to the telecom sector, which has a debt of ₹4.6 lakh crore, and make higher provisions to firewall their business against any future stress.

TRAI recommendations

On whether the Telecom Regulatory Authority of India (TRAI) has urged the government to favourably consider its recommendation to reduce levies and relax the payment period for auctioned spectrum to telecom players, Sinha replied in the affirmative.

According to TRAI, these recommendations will help in minimising the financial stress of the telecom companies and enable them to offer quality services to consumers at affordable prices, he noted.

To another query, Sinha said TRAI, last month, had proposed that the Department of Telecommunications may take up with the Finance Ministry “the issue of reduction in GST rate from 18 per cent to flat 5 per cent by declaring the telecom sector a core infrastructure industry and economy enabler in India.”

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