Telcos not investing in new technology causing financial stress: Reliance Jio


New Delhi: Mukesh Ambani-owned Reliance Jio on Monday said telecom companies not investing in new technology and instead leveraging their balance sheet are themselves to blame for financial difficulties.

Reliance Jio officials, who met the interministerial group (IMG) earlier in the day, said operators need to raise funds by selling stake or investing in new technology through internal accruals.

“Operators (excluding Jio) need to invest Rs1,25,000 crore, payback debt and they need to invest in technology, as growth is happening in data…they can do this by selling stake,” said a senior Jio official who did not want to be named.

Stating that the financial stress being faced by operators was “their own creation”, the official said, adding that the only policy intervention required is in form of reduction in the goods and services tax (GST) rates, licence fee and universal service obligation (USO) levies. Lowering of these levies can generate Rs20,000-Rs25,000 crore additional Ebitda (Earnings before interest, tax, depreciation and amortization) for the industry, the Jio official said after coming out from the 45-minute meeting with the IMG.

The IMG has begun consultation with operators as part of efforts to address the financial difficulties being faced by the sector. The telcos are reeling under a massive Rs4.6 trillion debt, and are facing pressure on revenue, profitability and all other financial matrix in face of increasing competition intensified by the entry of Jio.

Over the next few days, the IMG will also meet other operators including Bharti Airtel, Vodafone and Idea Cellular, as well as top officials of state-owned telecoms Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd.

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