Banks have expressed concerns over the financial pressure on the telecommunications industry. In the event of discussions with the Inter-Ministerial Group on the condition of the telecom industry, representatives of major banks said that if this is the case, then telecom companies can fail to repay the loans taken by banks from time to time.
Representatives from State Bank of India, Punjab National Bank, Axis Bank and HDFC Bank participated in the discussion with the intergovernmental group (IMG) in collaboration with the officials of the Ministry of Communications and Finance. All these were to say that banks have a debt of Rs 4.6 lakh crore on telecom companies. Obviously, they will be in stress. In such a situation, there is a possibility of failure in their debt repayment. Banks have endorsed the demand of telecom companies to pay spectrum price in 20 years and reduction in GST rates as well as license fees and spectrum usage charges.
In a meeting that lasted for two hours, the banks also suggested to the government to take measures to increase the cash flows. There can be another meeting with banks now with IMG.
According to sources, SBI has given the loan to the telecom industry about 80 thousand crore rupees. Last month, SBI chairman Arundhati Bhattacharya had written a letter to the telecommunications secretary expressing concern over the financial condition of the industry and saying that she would go above the head of the water. In the letter, he wrote, “With the introduction of new operators (meaning from Reliance Jio) and providing free services, operating income (EBITDA) of telecom operators has decreased and the Mali condition has deteriorated.
The total EBITDA of the industry on annual basis is Rs.65000 crores. The industry can not last for more than four lakh crores of debt on this income.