NEW DELHI: Bharti Airtel chairman Sunil Mittal warned the government that only one or two non-state phone companies would stay in business if current levels of competition persisted with tariffs pegged well below cost, according to four people aware of discussions that took place between leading carriers and telecom minister Manoj Sinha on Thursday
“Earlier there were 12 operators. We’re already down to six-seven. An operator with a strong balance sheet is shaking the industry, and the way it is going, it would be down to around three-four, including (state-owned) BSNL and MTNL,” Mittal is learnt to have said.
“The government needs to help… It has to decide on the level of competition that there should be in the sector,” SBI’s Sriram was cited as saying.
India’s largest lender also asked for spectrum to be used as collateral, even as it backed telcos’ demands to defer spectrum payments with a moratorium of three to five years and an increase in the number of instalments.
The meeting with Sinha took place within a week of an interministerial group (IMG) — set up to look into the financial stress in the sector — meeting all carriers in the background of the sector reeling under massive debt. Banks put the total debt of the sector at around Rs 8 lakh crore, including loans from Indian banks, overseas borrowings and annual installments for spectrum bought in auctions over the past few years, and have raised concerns about defaults.
Idea Cellular said the government should consider setting a floor price for tariffs, or a regime where the cost of the network is higher than the interconnect charge of 14 paise a minute, which at the moment is below that level.