New Delhi: Telecom operators seeking financial relief from the government want the department of telecommunications (DoT) to hire an independent evaluator to audit them and verify their financial stress.
Telecom firms for independent audit to prove stress
This comes after the government indicated no relief is likely unless all telcos— Vodafone Idea Ltd, Bharti Airtel Ltd and Reliance Jio Infocomm Ltd—agree there is financial strain. Jio does not agree the telecom sector is in financial stress.
“If all companies aren’t on the same page, then the government should get an independent evaluator. All of telcos are public companies, (they are) publicly audited, and investors are making decisions based on these numbers,” said Rajan Mathews, director general of Cellular Operators Association of India (COAI).
The lobby group believes this should not be a difficult exercise since DoT already plans to hire an agency to audit telcos’ adjusted gross revenue (AGR) every year.
The telecom sector is undergoing a fierce battle after the entry of Reliance Jio in September 2016, which sharply brought down tariffs. A year-long telecom consolidation has ended with two private entities—Bharti Airtel, and the merged entity of Vodafone India and Idea Cellular —finally pitted against Reliance Jio.
Vodafone Idea posted ₹4,970 crore loss in the September quarter, while Airtel posted a meagre ₹118 crore profit. Jio made a profit of ₹681 crore in the same period. Vodafone Idea also faces spectrum liabilities worth ₹3,000 crore due in March 2019 and an additional ₹12,000 crore due in middle of next financial year, Credit Suisse said in a note dated 22 November.
Vodafone Idea chairman Kumar Mangalam Birla last month met finance ministry officials and DoT to discuss the firm’s pending spectrum-related liabilities. He had also flagged concerns on the liquidity crunch in the sector. This was followed by the COAI writing to DoT seeking financial relief.
Under current norms, an operator has to pay some amount at the time of purchase of spectrum. This is followed by a two-year moratorium, after which the operator has to make the remaining payment over 16 years.
Vodafone Idea had sought increasing this period from 16 years to 18 years, apart from a two-year moratorium on interest charges for spectrum instalments. Reliance Jio has opposed the proposal.
“The problem is that they are not able to come together as an industry and say there is stress,” a senior government official had told Mint on 6 December. “We could have initiated some action if they could come together. If one player is opposing everything, and two players are saying they want relief, then what will the government do”?
Apart from the moratorium on payment of spectrum instalments, the industry body is also seeking reduction in spectrum usage charges and licence fee payments.