Lok Sabha Question No. 3045 (UNSTARRED), answered on 2018-03-14
Subject: Stress in Telecom Sector
Ministry: COMMUNICATIONS
Asked by: ANANDRAO  ADSUL, SHIVAJI ADHALRAO PATIL, SHRIKANT EKNATH SHINDE

## GOVERNMENT OF INDIA MINISTRY OF COMMUNICATIONS DEPARTMENT OF TELECOMMUNICATIONS

## LOK  SABHA UNSTARRED QUESTION NO. 3045 TO BE ANSWERED ON 14 th  MARCH, 2018

## STRESS IN TELECOM SECTOR

3045.  SHRI ANANDRAO ADSUL: SHRI ADHALRAO PATIL SHIVAJIRAO: DR. SHRIKANT EKNATH SHINDE:

Will the Minister of COMMUNICATIONS be pleased to state:

- (a) whether the telecom sector of the country is reportedly going through stress due to a huge debt pile, tariff war and irrational spectrum costs and if so, the details thereof and the reasons therefor;
- (b) whether there is a need to call for policy measures to minimize over-bidding of assets during auctions and if so, the details thereof;
- (c) whether  the  Government  proposes  to  frame  a  new  National  Telecom  Policy (NTP) to make the telecom sector primarily as an enabler to boost the economy rather than a revenue earner and if so, the details thereof and the time by when the said policy is likely to be implemented;
- (d) whether the NTP will lay a growth road map of the Indian telecom sector for a period of next five years; and
- (e) if so, the details and the salient features thereof and if not, the reasons therefor?

## ANSWER

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

- (a) Telecom  Industry,  Associations  and  State  Bank  of  India  have  apprised  the Government about the financial stress in the Telecom Sector.

Committee  of  Secretaries  (CoS)  had  discussed  the  issue  relating  to  stress  in balance sheet in select sectors in its meeting held on 29 th  March 2017. Consequently, an Inter-Ministerial Group (IMG) was constituted on 16/05/2017 with following terms of reference:

-  To examine systemic issues affecting viability and repayment capacity in telecom sector and furnish recommendations for resolution of stressed assets,
-  Policy reforms and strategic interventions for Telecom sector.

The IMG held  several  meetings  and  also  held  consultations  with  all  the  major TSPs and the Banks. Based on these and other sectoral data IMG analyzed the nature and extent of financial stress in the telecom sector and made a set of recommendations.

The IMG noted that the financial stress for some has been caused because  of low operating cash flows over a number of years, inadequate equity infusion and debt which  does  not  appear  sustainable.  The  sector  is  in  the  midst  of  consolidation.  The competitive context of the industry has led to accumulation of debt, a decline in EBIDTA and  requirement  of  periodic  infusion  of  additional  equity.  In  view  of  this,  the  primary solutions to the current problems in the sector will come internally from the TSPs and they  remain  liable  to  service  the  debt  taken  by  them.  Any  proposed  government intervention needs to be carefully calibrated to ensure that the short term pain points are somewhat eased, giving the sector time to rework its investment and business strategy.

(b) Spectrum Auctions are a way of price discovery of the Spectrum in different bands and in different Licensed Service Areas (LSAs).  The bidders make bids as per their financial capacity and requirement.

(c) to (e) The Department of Telecommunications has already initiated the process to formulate new National Telecom Policy in view of rapid technological advancements in the sector. The work on formulation of National Telecom Policy-2018 is in advanced stage and is likely to be completed soon. The broad roadmap and guiding principles of the National Telecom Policy-2018 have been approved by the Telecom Commission in the meeting held on 29.9.2017. The guiding principles inter-alia includes

- i) Digital  India  Vision  with  focus  on  the  role  of  telecom  as  a  fundamental enabler of economic growth, with the objective of enhancing overall social and economic benefits.
2. ii) Ensure financial stability and sustainable growth of the sector.

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