Distress call: Finance minister Nirmala Sitharaman hints at rescuing bleeding telcos

Distress call: Finance minister Nirmala Sitharaman hints at rescuing bleeding telcos
NEW DELHI: Finance minister Nirmala Sitharaman on Friday indicated that the government intends to address the concerns of telecom companies, which are facing acute financial distress and made it clear that it did not want any company to shut shop.

"I want no company to shut operations. I want everyone to be up and running. We want the economy to have good number of companies in business and flourish in their business. Not just telecom sector, my wish is all companies in all sector(s) be able to do business, service their market customer and survive. So with that approach, the finance ministry has always been talking and in telecom too that's the approach we have taken," the minister told reporters.

Combined Q2 loss of Rs 74,000 crore for Vodafone, Airtel

The battered Indian telecom sector is now bleeding heavily. Vodafone-Idea and Bharti Airtel, once among the country’s most aspirational and profitable companies, on Thursday reported record quarterly losses cumulatively standing at Rs 74,000 crore.

The statement came as Reliance Communications reported a loss of Rs 30,142 crore + during the July-September quarter, while Tata Tele (Maharashtra) posted a loss of Rs 2,335 crore after providing for liabilities in line with the Supreme Court order. After the results announced on Friday, second quarter losses for the listed telecom companies crossed the Rs 1 lakh crore mark (see graphic).

Telcos graphic (1)

The SC ruling on the Adjusted Gross Revenue (AGR) issue has put a question mark over the future of companies such as Vodafone Idea, with the company saying its ability to continue as a going concern is dependent on obtaining relief from the government.

Banks too are worried over their exposure to telecom companies with Anil Ambani-promoted Reliance Communications already facing bankruptcy action.

Vodafone CEO does a U-turn, says will stay invested in India growth story

A day after complaining that its India operations are on the brink of collapse over high taxes and spectrum dues demand, British telecom major Vodafone’s Global CEO Nick Read did a u-turn on Wednesday, claiming he was quoted out of context and re-affirmed the company’s commitment to the market.

Days after the Supreme Court verdict, the government had set up a Committee of Secretaries (CoS) under the cabinet secretary to suggest measures to reduce financial stress in the sector.

"We are also conscious that there is a Supreme Court order that the government has won and therefore, the department concerned has to take a call that would be a collective call, taking into account... understanding implication for the sector and finances of the government," Sitharaman said, adding that time was also a crucial factor.

Given the uncertainty over the receipts, the government has not taken a call on budgeting for it in this year's revenues as there is a demand to provide a moratorium and allow for staggered payment.