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Troubled by the banking sector’s huge exposure to the telecom sector, the Indian Banks’ Association (IBA) has asked the telecom department to refund auction money to mobile operators who want to surrender their spectrum and exit.
The association has said that the telecom sector is under financial stress and, therefore, the government should expedite a policy that will give relief to debt-laden operators.
“The government is requested to allow mobile operators who are undergoing restructuring to surrender the liberalised/auction acquired spectrum,” the IBA said in a letter to the Department of Telecom.
“This money will be used for repaying the banks, which in turn prevents loans from turning into NPAs. We understand that the government had allowed a similar facility to BSNL and MTNL in the past,” the letter added.
Further, the industry body has also sought refunding of excess upfront payments, rescinding of all future deferred spectrum liabilities and the return of bank guarantees submitted for spectrum buys.
“The returning of bank guarantees without encashing will help to free up working capital for these operators,” the association said.
Falling revenuesAs of March 31, 2017, the total liabilities of the telecom industry stood at ₹7.75-lakh crore, of which bank borrowings and liabilities towards spectrum payment to the DoT amount to ₹5.8-lakh crore.
In its first-ever decline, the industry’s adjusted gross revenue (AGR) fell to ₹39,777.55 crore in the first quarter of this financial year from ₹53,383.55 crore in the year-ago period.
“The financial crisis in the telecom sector had seen the entire industry approaching the government for policy support to overcome the current situation as reduced revenues and EBITDA margins of the industry are not sufficient to meet the existing debt obligations and deferred payment commitment of spectrum,” the letter, a copy of which was reviewed by BusinessLine , said.
“We wish you to expedite the process as it becomes difficult for mobile operators to survive and service their debt without immediate government support,” the IBA said.
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