New Delhi: Kumar Mangalam Birla, chairman of Vodafone Idea Ltd, has flagged concerns about severe liquidity crunch in the telecom sector and high spectrum payments during a recent meeting with telecom minister Manoj Sinha, an official said.

The telecom sector has been battered by falling tariffs, eroding profitability and resulting in mounting debt, in the face of stiff competition triggered by disruptive offerings of Reliance Jio.

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Birla, who heads Vodafone Idea, the country’s largest mobile operator, raised the issues during a meeting with Sinha, which was also attended by telecom secretary Aruna Sundararajan.

A senior telecom ministry official said that the meeting took place recently where Birla talked about the severe liquidity crunch in the market, and underscored the need for relief.

The talks were informal and the Department of Telecommunications will take a view on the issue once a formal representation is made, according to the official quoted above.

Vodafone Idea Ltd declined to comment on an e-mail query sent to the company on the issue.

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The Vodafone Idea chief expressed concern over 30,000 crore locked up due to GST payment under the reverse charge mechanism.

Under the GST reverse charge mechanism provision, registered dealers need to make tax payments in case they procure goods from unregistered businesses. The provision was applicable from July 1, 2017 till October 12, 2017. With companies facing trouble in implementing the provision, the GST Council has decided to keep the mechanism in abeyance till September 30, 2019.

Among other concerns highlighted by Birla was the high upfront payment for radiowaves, the official said, adding, he sought an increase in the period of payment for spectrum purchase to 18 years from the current 16, and favoured a moratorium. High levies in the telecom sector and the recent hike in import duty also figured in the talks, the official but did not elaborate.

A bruising tariff war sparked by the entry of Reliance Jio with free voice calls and SMS, bundled with cheap data, which led to pressure on margins of incumbents. Earlier this month, at its maiden earnings announcement as a joint entity, Vodafone Idea Ltd reported a consolidated loss of 4,973 crore for the September quarter and announced a fund infusion of 25,000 crore.

Bharti Airtel reported a drop in consolidated net profit for the 10th straight quarter as losses on its mainstay India business widened due to pricing pressure from aggressive competition. Overall, its consolidated net profit of 118.8 crore in July-September represented a drop of about 65% from 343 crore in the year-ago period.

Bharti Airtel’s loss from India operations (before exceptional items) mounted to 1646.4 crore in the second quarter of the current fiscal, compared with 940 crore in the preceding three-month period.

In fact, Moody’s Investors Service recently placed Bharti Airtel’s rating on review for downgrade, following low levels of profitability and expectation of weak cash flow.

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This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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