Telecom honchos, including Sunil Mittal and Anil Ambani, on Thursday met Minister of State for Communications (Independent Charge) Manoj Sinha, and expressed their concerns on the financial stress in the sector.

Those present in the meeting told BusinessLine that the financial situation was put before the minister. They said only three players other than BSNL and MTNL would survive if the government doesn’t intervene.

Present at the meeting were senior executives from Bharti Airtel, Reliance Communications, Reliance Jio, Tata, Idea Cellular and Telenor. Airtel cited the example of Himachal Futuristic Communications Limited’s (HFCL) ₹85,000-crore bid in 1996, which had hit the industry, and which resulted in the government coming out with a policy to revive the sector.

“Today, an operator with a strong balance sheet (read Reliance Jio) is shaking up the industry. The government started the auction of spectrum after 2010, but has not closed spectrum usage charges based on revenue share,” an Airtel executive said at the meeting.

“It is like being asked to pay rent for a building one has bought. This needs to be corrected,” the executive said.

Voicing similar concerns, other players said the market has got distorted because operators whose licences were up for renewal had to bid high as one of the operators kept pushing up the price. Operators also requested the government to reduce licence fee and spectrum usage charges.

Airtel wanted them to be capped at 1 per cent. Idea said that the license fee should be reduced, while the spetrucm usage charge should be made uniform. Idea noted that revenue is expected to decline to 8 per cent, from 10 per cent, across the industry in the next year.

Tata said the biggest cost is spectrum, and sought spectrum deferred payment be aligned to licence period. It said the time limit for spectrum trading and sharing should be removed and sharing should be allowed irrespective of whether the spectrum holdings are liberalised or un-liberalised. Jio representatives said an industry witnesses revenue dip when new operators enter the sector, like it happened for BSNL and VSNL in 2002-2003. A similar thing happened in 2008 when new operators entered; but the industry revenue grew subsequent to this, the firm claimed. Jio representatives said EBITDA margins in the industry are close to 30 per cent, which is the highest across various industries.

After the meeting, Sinha told mediapersons that an Inter-Ministerial Group (IMG) has been formed to examine systematic issues affecting the viability and the repayment capacity in the telecom sector. The IMG will furnish recommendations to resolve stressed assets at the earliest and recommend policy reforms and strategic interventions.

“The group is expected to submit the report soon,” he added.

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