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Dec 07, 2017 01:43 PM IST | Source: Moneycontrol.com

IBA lists measures to reduce financial stress of telecom companies

One of the hardest hit telcos is Reliance Communications Limited. It shut down its 2G and 3G business to completely only on 4G. The company managed to get a seven-month June standstill on servicing its debt.

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In an attempt to unburden stressed telecoms, the Indian Banks’ Association (IBA) has suggested refund of telecom operators' excess advance payment for surrendered spectrum as well as letting go of deferred payment liabilities on airwaves.

“This money will be used for repaying the banks, which in turn prevents loans from turning into NPA (non-performing assets),” A Mint report quoted IBA’s Chief Executive VG Kannan to telecom secretary Aruna Sundararajan on November 29.

The IBA states the total liabilities of the telecom sector are at Rs 7.75 lakh crore as of March 31. Amounts borrowed from the bank and liabilities towards spectrum payment totaled Rs 5.80 lakh crore.

State-run Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam already have a precedent in these issues.

Telecom industry has been wading through troubled waters recently with some players even having to shut down certain operations.

In September, the Telecom Commission brought out measures such as giving operators six more years to pay for spectrum purchases and lowering its interest burden on penalties related to payment of spectrum usage charges and license fees.

The measures still seek go-ahead by the Union cabinet.

The IBA also requested the government to return the bank guarantees paid by the telecom companies without being encashed. This would keep working capital lines open for operators.
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