- Four large banks that met an inter-ministerial group (IMG) today expressed concern over “stress” in the telecom sector and flagged the possibility of loan default by operators.
- The IMG met officials from four leading banks — State Bank of India, Punjab National Bank, Axis Bank and HDFC Bank on financial difficulties being faced by the telecom industry, whose debt burden stand at a whopping Rs 4.6 lakh crore.
- The banks in the two-hour meeting talked about measures that can be taken to enhance liquidity.
- Sources further said that SBI’s exposure to the telecom sector is to the extent of Rs 80,000 crore.
- The IMG, comprising officials from ministries of communications and finance, is meeting operators and lenders to discuss financial difficulties being faced by the industry, and measures that can be taken to ease the situation.
- “The stress in the sector has reached highly unsustainable levels after the entry of new players and launch of free services which led to erosion of topline and EBITDA of the telecom service providers,” the letter said.
- The letter said that the total EBITDA of the sector on an annualised basis is Rs 65,000 crore which is “clearly unsustainable” for debt of more than Rs 4 lakh crore.
- The bank also sought immediate and large scale intervention to “stem the slide”.
- It has asked for deferred payment liability for spectrum to be aligned to 20 years, rationalisation of GST rates, as also licence fee and spectrum usage charges.
via Banks express concern over stress in telecom sector | Business Standard News