Lok Sabha Question No. 5349 (UNSTARRED), answered on 2018-03-28
Subject: Closure of a Telecom Service Provider
Ministry: COMMUNICATIONS
Asked by: BALASUBRAMANIAM SENGUTTUVAN, GOPALAKRISHNAN CHINNARAJ, NAGARAJAN P.

## GOVERNMENT OF INDIA MINISTRY OF COMMUNICATIONS DEPARTMENT OF TELECOMMUNICATIONS

## LOK  SABHA UNSTARRED QUESTION NO.5349 TO BE ANSWERED ON 28 th      MARCH, 2018

## CLOSURE OF A TELECOM SERVICE PROVIDER

5349. SHRI B. SENGUTTUVAN: DR. C. GOPALAKRISHNAN: SHRI P. NAGARAJAN:

Will the Minister of COMMUNICATIONS be pleased to state:

- (a) the details of Telecom Service Providers (TSPs) in the country;
- (b) whether  many  TSPs  are  incurring  losses  due  to  unhealthy  competition  in  the telecom market and if so, the details thereof, TSP-wise;
- (c) whether  a  private  TSP  has  filed  for  bankruptcy  recently  and  if  so,  the  details thereof and the reasons therefor and the steps taken/being taken by the Government to prevent the recurrence of such incidents;
- (d) whether the sudden termination of all forms of  services  by  the  said private  TSP without any opportunity of porting has led to consternation among its customers and if so, the details thereof and the steps taken by the Government in this regard; and
- (e) whether the volume of porting has increased in recent times which has led to TRAI fixing the cap on the Mobile Number Portability (MNP) fee and if so, the details thereof?

## ANSWER

## THE MINISTER OF STATE (IC) OF THE MINISTRY OF COMMUNICATIONS & MINISTER OF STATE IN THE MINISTRY OF RAILWAYS (SHRI MANOJ SINHA)

- (a) The details of Telecom Service Providers (TSPs) is placed at Annexure-I .
- (b) Based  on  audited/unaudited  information  submitted  by  telecom  service  sector companies to TRAI, the profit before tax (PBT)for the telecom service sector companies has decreased from Rs.(-) 1699 crore for the financial year 2015-16 to Rs.(-)38153 crore for  the  financial  year  2016-17.  For  the  financial  year  2016-17,  out  of  a  total  of  50 companies,  24  companies  have  shown  losses  (i.e.  decrease  in  PBT).  Government ensures  healthy  competition  in  telecom  sector.  Recently,  TRAI  has  reiterated  the regulatory principles of non-predatory, non discrimination and transparency in tariff offers vide Telecommunication Tariff (63rd Amendment) Order, 2018 on 16th February, 2018. The details of losses of MTNL for last 3 years is as follows:

| Year    | Losses (in Cr.)   |
|---------|-------------------|
| 2014-15 | 2893.39 crs.      |
| 2015-16 | 2005.74 crs.      |
| 2016-17 | 2941.08 crs.      |

The loses of BSNL during the last three years are as under:

| Year    | Losses (in Cr.)   |
|---------|-------------------|
| 2014-15 | 8235 Cr.          |
| 2015-16 | 4859 Cr.          |
| 2016-17 | 4793 Cr.          |

The particulars of Airtel are as below:

| Particular                 | 31-03-2013   | 31-03-2014   | 31-03-2015   | 31-03-2016   | 31-03-2017   |
|----------------------------|--------------|--------------|--------------|--------------|--------------|
| Total Debt/ Equity         | 123%         | 119%         | 121%         | 142%         | 145%         |
| EBITDA / Interest Exp.     | 6.2x         | 7.6x         | 11.0x        | 8.7x         | 3.7x         |
| Total Debt/ EBITDA         | 2.9x         | 2.7x         | 2.6x         | 3.0x         | 3.0x         |
| Total Debt/ (EBITDA-CAPEX) | 6.4x         | 4.7x         | 4.9x         | 6.9x         | 8.2x         |

The particulars of Idea are as below:

| Particular                 | 31-03-2013   | 31-03-2014   | 31-03-2015   | 31-03-2016   | 31-03-2017   |
|----------------------------|--------------|--------------|--------------|--------------|--------------|
| Total Debt/ Equity         | 98%          | 125%         | 117%         | 161%         | 209%         |
| EBITDA / Interest Exp.     | 6.2x         | 8.4x         | 10.2x        | 7.0x         | 2.2x         |
| Total Debt/ EBITDA         | 2.4x         | 2.7x         | 2.6x         | 3.2x         | 5.8x         |
| Total Debt/ (EBITDA-CAPEX) | 5.9x         | 5.3x         | 4.5x         | 7.8x         | NA           |

The particulars of Reliance Communications are as below:

| Particular                 | 31-03-2013   | 31-03-2014   | 31-03-2015   | 31-03-2016   | 31-03-2017   |
|----------------------------|--------------|--------------|--------------|--------------|--------------|
| Total Debt/ Equity         | 121%         | 126%         | 104%         | 118%         | 154%         |
| EBITDA / Interest Exp.     | 2.8x         | 2.6x         | 2.9x         | 3.0x         | 2.2x         |
| Total Debt/ EBITDA         | 6.5x         | 5.8x         | 5.5x         | 6.3x         | 7.4x         |
| Total Debt/ (EBITDA-CAPEX) | 9.7x         | 8.2x         | 8.5x         | NM           | NM           |

*Note:  The likelihood of a company getting into financial stress is high when the Debt/ EBITDA ratio is 4X or above on a sustained basis. Considering cost of debt at 10% per annum and 8-year repayment period, the annual servicing is of the order of 22.5% of the outstanding debt amount, i.e. one-fourth of the debt needs to be serviced every year. In such a scenario, if the Debt: EBITDA ratio increases beyond 4X, the Company will not be able to service debt

(c) & (d) Three bankruptcy petitions bearing NO. 298/2018, 300/2018 and 302/2018 have  been  filed  by  corporate  debtors  M/s  Aircel  Ltd.,  M/s  Aircel  Cellular  Ltd.  and  M/s Dishnet Wireless Ltd. respectively,  under Section 10  of  the  Insolvency  and  Bankruptcy Code,  2016  in  the  National  Company  Law  Tribunal  (NCLT),  Mumbai Bench  on 28.02.2018.  Director  (Service  Compliance),  Office  of  the  Deputy  Director  General  (C) Coimbatore [Formerly TERM-Cell, Tamil Nadu] had informed that during the EMF Audit

on 20th February 2018, it has been revealed that most of the BTSs of M/s Aircel Ltd are found  switched  off  and  this  has  led  to  non-generation  of  UPC,  thereby  causing  great inconvenience of the customers. It has also been mentioned that the quality of service being offered to the customers is - getting adversely affected. M/s Aircel Ltd through their letter dated 22nd February 2018 have informed that their major infra-provider has turned off as much as one third of their total sites in different LSAs across the country and has caused disruption in the network. In this connection, with  a view to help subscribers to exercise  their  right  to  port  they  have  requested  TRAI  to  issue  necessary  direction  to generate UPC through additional codes etc. After examination, a Direction was issued on 27th February 2018 to Mobile Number Portability Service Providers (MNPSPs), M/s Aircel and  other  TSPs  to  facilitate  portability  by  providing  additional  codes  for  generation  of UPCs  for  the  subscribers  of  M/s  Aircel  Ltd.  All  the  Telecom  Service  Providers  are governed by the License Agreement entered into with the Department of Telecommunications  (DoT).  Keeping in view that there has been  a large scale deterioration of the services, DoT  has  issued  direction  to  M/s  Aircel  Limited  on 19.03.2018 for compliance of various clauses of the agreement including those relating to customer services and Quality of Performance.

(e) Till  2015,  for  the  purpose  of  MNP  service,  the  entire  country  was  divided  in  two zones with 11 LSAs in each zone and MNP service was allowed only within the LSA. The scope  of  MNP  was  expanded  in  the  financial  year  2015-16,  when  MNP  service  was allowed across all licensed service areas on Pan India after the national rollout (Full MNP) w.e.f. 3rd July 2015. This resulted in huge upsurge in the number of porting requests from 64 lakh in 2010-11 to 636 lakh in 2016-17. TRAI reviewed upsurge in the porting requests when MNP services were opened on PAN India basis and the financial results of both the MNP Service Providers for the last two available years, TRAI decided that the per port transaction  charge  may  be  reduced.  After  -  following  the  consultation  process,  TRAI notified "The Telecommunication Mobile Number Portability Per Port Transaction Charge and Dipping Charge (Amendment) Regulations, 2018 (03 of 2018)" prescribing the 'Per Port Transaction Charge' of Rupees Four for each successful porting and simultaneously reducing the ceiling for MNP charges from Rs.19 / - to Rs.4 /-.

The details of Telecom Service Providers

|   Sl. No. | Type of License                           |   No. of Licenses/Authorisation |
|-----------|-------------------------------------------|---------------------------------|
|         1 | Basic                                     |                              02 |
|         2 | CMTS(Cellular Mobile Telephone Services)  |                              28 |
|         3 | UASL(Unified Access Services Licence)     |                              86 |
|         4 | Unified License (UL)                      |                              93 |
|         5 | Unified Licence (VNO)                     |                             122 |
|         6 | Internet Service provider (ISP) License   |                             206 |
|         7 | Unified License of ISP Authorisation      |                             991 |
|         8 | International Long Distance (ILD) License |                              22 |
|         9 | National Long Distance (NLD) License      |                              28 |

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