Indian telecoms crisis: now business leaders get involved

Indian telecoms crisis: now business leaders get involved

According to local press reports, the Federation of Indian Chambers of Commerce & Industry (Ficci) is now getting involved in the ongoing debt crisis affecting at least two of the country’s big three operators.

Ficci has apparently asked finance minister Nirmala Sitharaman to intervene in a letter to that underlines the importance of the telecommunications sector to the economy.

This follows the recent Supreme Court verdict that asked various telecommunications groups to pay back outstanding debts to the Department of Telecommunications (DoT), a judgment that has hit Vodafone Idea and Bharti Airtel hardest of all.

Indian press reports indicate a sector with a declining number of players, the lowest average revenue per user (ARPU) worldwide and debts totalling tens of billions of dollars. There will be a two-year moratorium to service providers on spectrum payment dues. Nevertheless the widely reported decision by the Indian government not to reduce prices of 5G spectrum for the upcoming auction is a further blow to a beleaguered industry.

Even planned price hikes of 20 per cent or so may not be enough. In fact, in an interview with India’s Economic Times, Naveen Kulkarni, head of research at financial services company Reliance Securities, says tariffs may need to hit 50 per cent or so, for the industry to, as he puts it “start delivering meaningful numbers”.

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