Tuesday, 13 June 2017

Telecom debt woes due to incumbents not investing in biz

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Mukesh Ambani-led Reliance Jio ascribed financial stress in the telecom sector to existing operators like Bharti Airtel and Idea running businesses on debt and investing heavily in unrelated sectors. Jio, whose promotional free voice and data offering for 7 months is blamed by incumbent operators for the financial woes of the sector, said the "problem lies elsewhere" as the Airtel, Vodafone and Idea milked the sector all these years by running the businesses on debt and now when consumer is benefiting why should anyone complain.

In a detailed presentation to an inter-ministerial group constituted to look at the telecom sector woes, Jio said the operators complaining of financial stress haven't invested in equity or even in their own networks and have overleaveraged balance sheets. The incumbent operators, it said, "made significant returns" over the years but have not invested in equity. Their excessive dependence on debt has led to "unsustainable balance sheets," Jio said, citing Airtel drawing Rs 2,28,831 crore debt since 2010 while infusing just Rs 6,978 crore as fresh equity in business.

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