NEW DELHI (Reuters) – india’s telecoms sector and its leading players Bharti Airtel and Vodafone Idea will be confronted with an “unprecedented crisis” as well as the government refuses to relax its demand for $13 billion worth of outstanding obligations, a lobby group has said.
FILE PHOTO: A young girl checks her mobile phone as she walks past, the Bharti Airtel office building in Gurugram, formerly known as the Gurgaon, on the outskirts of New Delhi, India, on April 21, 2016. REUTERS/Adnan Abidi/File Photo/File Photo
Bharti and Vodafone and Idea have been alarmed by the Indian Supreme court’s decision last week to uphold a government’s requirements, that it will force the companies to pay the bulk of the 920 billion rupees ($13 billion) in overdue taxes and interest….
The Cellular Operators Association of India (COAI) lobby group has joined the fray, seeking the intervention of India’s telecom minister, in a letter dated Oct. 29, on the ground that such payments will lead to a crisis in the business and was in the industry as a whole.
Investments may be limited, services may be reduced, the number of jobs would be lost, and the confidence and trust of investors, it will certainly be broken in,” COAI Director-General Rajan S. Mathews said in a letter seen by Reuters.
“The impact of the crisis may be intensified by the stress in the industry, and potentially catastrophic for the nation.”
The government’s telecom ministry did not respond to a request for comment.
A person with direct knowledge of the matter said Bharti and Vodafone are backing COAI opinions expressed in the letter. But the Reliance Industries-owned rival Jio, as a COAI member, said the lobby group’s letter, would not be representative for the industry.
Faith fully agree with the intent, the tone, the content and the connotations of the COAI letter,” he said in a letter to COAI, of which it is to be released to the media.
Jio began operations in late 2016 and will be the least affected by the decision of the Supreme court, because it was only $2 million in fees to clear it.
The COAI letter said that the $13 billion, the question is also in danger of more than 600 billion rupees ($8.5 billion) of the annual payments by Bharti and Vodafone and Idea to the government, and threaten their ability to service existing debt.
“Such an adverse outcome will lead to a chain of events that will lead to a distortion of the whole of the company’s supply chain,” the letter said, ” the COAI on the lookout for a two-year moratorium on the payments for the airwave spectrum in the 2020 to 2022.
India is the telecom sector would have to more than a dozen mobile operators are, however, consolidation has resulted in only three private players – Bharti, Vodafone and Jio and the other two debt-ridden state enterprises.
A government source said on Monday that a panel of bureaucrats had been formed to find ways to ease the financial pressure on the sector.
Reporting by Aditya Kalra and Sankalp Phartiyal; Editing by David Goodman