‘The new age telecom companies are digital innovators and need all the support and a benign investment environment in which healthy margins support large scale CAPEX investments. Hence there is an urgent need to re-focus on ease of doing business and improve the financial health for the sector’
India has the second largest telecommunications subscriber base in the world with 1.14 billion subscribers and the sector has seen a substantial FDI flow of USD 4.6 billion in FY 20. The sector is also witnessing a lot of interest from global technology companies and global funds, the recent 22.38% stake sale by Jio platforms for USD 14.75 billion being a case in point. Although the government continues to place significant emphasis on initiatives such as Digital India and promote an enabling environment for ‘ease of doing business’ as well as for attracting investments in the economy, the Telecom sector is besieged with enormous challenges that pose an existential risk for the companies in the sector. There has been significant disruption in the last few years, which has resulted in only three active private Telecom service providers (TSPs). These TSPs face unprecedented financial stress (over INR 7 trillion of debt) owing to huge AGR related dues (over INR 1.47 trillion) and various other challenges such as high spectrum procurement cost, disruptive pricing, intensive market competition, revision of taxes imposed post GST implementation and high contribution towards Universal Service Obligation Fund (USOF).
Source: ET Telecom
