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Do debt-hit private telecom firms need helping hand? Panel of civil servants to decide

India’s telecom sector has shrunk from a dozen operators to just three private firms, after Reliance Jio debuted in 2016 with free calls & cheap data.

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Mumbai: A panel of senior Indian bureaucrats will discuss the need for measures to mitigate financial stress of nation’s wireless carriers, which have been battling high debt levels and a bruising price war.

A Committee of Secretaries will look into the demands made by telecom companies to defer the tranches of airwave auction payments that are due by March 2021 and March 2022, a government official told reporters while declining to be identified citing rules. The panel will also examine companies’ demand for reducing the spectrum usage levies and the Universal Service Obligation Fund charge, which is currently levied at 5%.

India’s telecom sector has shrunk from a dozen wireless operators a couple of years back to just three private sector firms, after Mukesh Ambani’s Reliance Jio Infocomm Ltd. debuted in 2016 with free calls and cheap data. The ensuing price war forced rivals to merge, quit or go bankrupt. The two surviving carriers are also struggling, with Vodafone Idea Ltd. posting 11 straight quarters of net losses and Bharti Airtel Ltd. slipping into its first-ever loss in the June quarter.

Also read: Telecom revolution took India to 21st century. The state is taking it backwards

Court Order

Just when the price competition showed signs of easing, the older carriers were hit by a court order last week asking them fork out billions to the government in a two-decade old legal dispute.

India Orders Wireless Carriers to Pay $13 Billion in Past Dues

The court ruling led to Bharti delaying its earnings announcement saying it needed more time to assess this “adverse outcome” and seek help from the telecom ministry.

Besides the measures suggested by this government panel, the Indian telecom regulator will also examine the case for minimum charge for voice and data services to help boost operators’ revenues, this official said.

The data prices, which have crashed to 8 rupees (11 cents) per GB, is likely the lowest in the world while the average revenue per user per month has declined from 174 rupees in the year ended March 2015 to 113 rupees by March 2019, this person said.

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