Telecom Sector in Crisis - Technopediasite

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Wednesday, November 20, 2019

Telecom Sector in Crisis

Telecom Sector in Crisis in India is a matter of concern .The plight of the telecom sector in India is increasing day by day. Today we will talk about this issue in this article. Almost all telecom companies of India are going to close except Reliance Jio. Till now Airtel and Vodafone remained in the market but now both companies are in crisis.

Will India now depend on only one telecom company?Will there be no other option for the people of India in telecom sector?I think this is very worrying for the future. BSNL, the largest telecom company of the Government of India, has closed down and 70,000 employees of BSNL have already opted for the VRS scheme.Then you may wonder what has happened to other telecom companies.
More crisis in Indian telecom sector
Indian Telecom Sector in Crisis

Vodafone Critical situation

It is important to write here that Vodafone and Idea Telecom industry in India is on sand dunes. These two companies may be closed very soon. Vodafone-Idea issued a statement saying that it had liabilities as on September 30, 2019, as license fees of about Rs 27610 crore. Apart from this, Rs 16540 crore is to be paid as spectrum usage and Rs 33010 crore as interest, penalty and penalty on interest. After supreme court order, this amount has to be paid within 90 days.

If the company does not pay in 90 days, then the government will ask for the guarantee given by the banks to be converted into a loan. Vodafone and Idea have already said that they will not invest any new capital in this joint venture. Both companies have said that the best would be to declare themselves bankrupt by repaying the loan.It may be that both these companies are closed in next sunrise.

Vodafone-Idea may become biggest loser for banks after having biggest quarterly loss in telecom corporate history. In such a situation, bankruptcy of the company can become a problem for banks.

SBI has given maximum loan to telecom sector

Companies in the telecom sector have got the maximum loan from SBI. 11 banks have given a total loan of Rs 1.5 lakh crore to telecom companies. State Bank has given Rs 37,330 crore.

On the other hand, HDFC Bank Rs 24,515 crore, Axis Bank Rs 17,135 crore, Union Bank Rs 15,346 crore, Bank of Baroda Rs 11,471 crore, Punjab National Bank Rs 7,318 crore, IDBI Bank Rs 6,172 crore, Canara Bank 6,080 crore Yes, Yes Bank has given Rs 5,908 crore, Kotak Mahindra Bank has given Rs 4,676 crore and IndusInd Bank has given loan of Rs 2,484 crore to all the running telecom companies across the country. 

Vodafone Idea owes Rs 17,100 crore

Vodafone Idea had a total liability of Rs 17,100 crore in the financial year ended 31 March 2019. The company has also mentioned this in its balance sheet. The company had then placed an item of Rs 4300 crore to pay the liability. The gross liability of the company was Rs 1.22 lakh crore, out of which Rs 90,700 crore is spectrum liability and Rs 31 thousand crore is non-spectrum liability.

Companies are demanding from the government that the time limit of 90 days to be paid should be increased to at least 20 years. If this is not done, it can be difficult for companies to keep their business running.

Airtel has suffered so much

Bharti Airtel has suffered a major setback by the Supreme Court's order to pay the dues. As per the results released on Thursday, the telecom company incurred a huge loss of Rs 23,045 crore in the July-September, 2019 quarter.

At the same time a year ago, the company had a profit of Rs 119 crore in the same quarter. However, the company said that the results could not be compared due to the new accounting system. So can Airtel also be declared bankrupt? Right now Airtel is also running at a huge loss.

BSNL already in crisis

More than 77,000 employees of telecom company Bharat Sanchar Nigam Limited (BSNL) have opted for voluntary retirement scheme (VRS) so far. This means that the BSNL company is almost closed.Out of the total one and a half lakh employees of BSNL, about one lakh employees are eligible to take VRS. The effective date of the voluntary retirement scheme is 31 January 2020.

Telecom sector can be more crisis

Dr. Ravi Singh, Vice President and Head of Research, Karvy Stock Broking Limited, said that the judgment of the Supreme Court could worsen the already underperforming telecom sector.At present, there are four lakh crore rupees owed to the companies working in this sector. The new decision will increase the additional arrears of Rs 1.3 lakh crore to these companies.

The government will have to take some concrete steps to give relief to the telecom sector, otherwise it will break the steps of Digital India. Most of the 16 companies that AGR has to pay have closed.

This has put an additional burden on the rest of the companies, to reduce which the panel constituted by the government should work. If this does not happen, then the situation on the financial front of the companies can be worse.

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