Fitch assigns negative outlook to telecom sector for 2012

PTI New Delhi | Updated on November 17, 2011 Published on November 17, 2011

Credit rating agency Fitch has given negative outlook for Indian telecom services providers for 2012, saying they battle regulatory uncertainty on spectrum issues along with a new telecom policy in the wings.

“In terms of operations, we expect telecom operators performance to improve but regulatory uncertainty can impact them to such levels that can deteriorate their credit matrix,” Mr Nitin Soni, Associate Director in Fitch's Asia-Pacific Telecommunications, Media and Technology team, said here.

One-time spectrum charges, spectrum re-farming and imposition of spectrum renewal fees are three important issues that can impact large operators if the Telecom Ministry approves the recommendations by the regulator TRAI, Mr Soni said.

Further, the Government is in the process of finalising a new national telecom policy that proposes a number of regulatory changes for the sector, including introduction of voice over Internet protocol (VoIP), and removal of roaming charges, which can further impact their revenue.

Fitch said that state-owned BSNL and MTNL besides six small private telecos, including STel, Uninor, Etisalat and Videocon, will continue suffering operating losses.

The agency expects positive outlook for top four telecom operators Airtel, Vodafone, Idea and Reliance Communications but did not ignore them isolated from regulatory risk.

Published on November 17, 2011
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