Reliance Jio to IMG: Incumbent Telcos May Raise Funds by Stake Sale to Pare Debt

By June 12th, 2017 AT 10:59 PM

Reliance Jio during its meeting the Interministerial Group (IMG) on Monday said that incumbent telecom operators might raise funds by selling stake or invest in new technology through internal accrual if they are facing financial difficulties, adding that they themselves are to blame for these financial difficulties as they are leveraging their balance sheets, a PTI report said.

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The inter-ministerial group, comprising officials from ministries of communications and finance, is set to meet telecom operators this week to discuss the financial difficulties being faced by the industry and measures that can be taken to ease the situation. Indian telecom operators are currently reeling under a Rs 4.6 lakh crore debt, and are facing pressure on profitability and revenue due to the intense competition introduced by the entry of Jio.

A Jio official said that the financial stress being faced by telcos was their own creation. He added that government could provide support in the form of a reduction in GST rates, licence fee and USO levies, which combined can generate Rs 20,000-25,000 crore additional EBITDA for the industry.

The Mukesh Ambani-led telco also said that incumbents telcos are not investing in technology to keep up the pace with the data growth.

“Operators (excluding Jio) need to invest Rs 1,25,000 crore, pay back debt and they need to invest in technology, as growth is happening in data…they can do this by selling the stake,” a Jio official was quoted as saying.

According to PTI, the IMG met Reliance Jio, Reliance Communications, Tata Teleservices and Aircel. Over the next few days, the IMG will meet Bharti Airtel, Vodafone and Idea Cellular.

The IMG will also meet Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL)

Passionately following the Indian #Telecom Industry for over a decade from Business, Consumer and a Technical perspective. My primary focus area is Consumer & Digital Experience.

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