The Indian government is considering easing the terms for spectrum-related payments for the telecoms industry, which is facing declining profitability and rising debt levels, after Vodafone Idea requested relief.
Kumar Mangalam Birla, chairman of the country’s largest operator Vodafone Idea, held discussions with finance ministry officials to seek more time to make spectrum-related payments of INR9 billion ($126 million) due in March 2019, The Economic Times (ET) reported. He reportedly is looking to make payments in 12 instalments.
A ministry official told ET Birla warned the newly merged company, which reported a loss of INR49.7 billion in its fiscal Q2 2019 (the three months ending 30 September), was in danger of missing the March payment.
Seeking to avoid a default, which would hurt confidence across an industry struggling due to a two-year price war, officials from the finance and telecoms ministries met to discuss creating a rescue plan, which would need to be extended to all operators, the newspaper said.
ET cited another official as saying: “We don’t want a default; we will work out something,” adding staggered payments is an option.
Vodafone Idea said last week it will explore raising up to INR250 billion in new capital. But some analysts think the infusion may only offer short-term relief as margins and turnover are forecast to weaken further.
Rival Bharti Airtel, now the second-largest mobile player in the country, suffered another quarter of falling profit and revenue in its fiscal Q2, led by a double-digit drop in sales and a sequential decline in subscribers in India. Its net profit for the quarter ending 30 September dropped 65.4 per cent year-on-year to INR1.19 billion, with total revenue down 6.2 per cent to INR204 billion.Subscribe to our daily newsletter Back