Govt unlikely to provide relief package, due to differences among telcos on financial stress

Despite the fact that the telecom companies are sitting on a huge debt, the government is unlikely to provide any relief packages as there are differences among operators on financial stress, PTI reported.

According to a report, telecom players are not speaking in one voice on the overall issue of financial stress and this makes it "difficult" for policymakers to respond to operators' call for 'relief package'.

"While certain operators had expressed concerns on severe liquidity crunch in the sector and high spectrum payments, one of the key players had disagreed with the position. This polarisation reflected in the industry association's representation to the government too," the news agency quoted official here who did not wish to be named.

The official said," A committee has been also set up to look into the issue of recently-hiked import duty on telecom equipment."

Meanwhile, a research firm ICRA said that the recent rupee depreciation and increase in diesel prices would hurt the industry further.

As per ICRA estimates, the debt as on March 31, 2018, stood at Rs. 4.7 lakh crore. For FY2019, it expects the industry debt levels to reduce to Rs. 4.2 lakh crore, with the monetization of tower assets and promoter support being the major drivers. Nevertheless, the debt protection metrics will continue to remain weak - estimated debt/EBITDA more than 7.0x as of March 31, 2019.

The industry debt remains elevated owing to a reduction in organic cash flow generation and consistently high CapEx requirements.

Further, the recent rupee depreciation has added to the debt levels.