Indian telcos call on government to urgently prioritise low cost borrowing

India remains one of the world’s most competitive telecoms markets, with telcos struggling to balance the competing demands of ultra-fine margins with the huge capital investment demands associated with 5G
India, Finance, Telecoms, 5G, DoT

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Indian telcos have called on the country’s government to extend low interest loans and funding to the country’s beleaguered telecoms sector, as the industry struggles to balance hyper competitive market conditions with the gargantuan capital investment demands of 5G.

A report in the Economic Times of India stated that top telecoms officials met with representatives from the Department of Telecoms to request the government to take steps to lower the cost of finance for telcos. The Department of Telecoms will consult with industry players until the middle of this week, after which time it will pass its recommendations to India’s Department of Finance.

Sources close to the matter told the Economic Times that telcos had requested the lowering of interest rates for loaned capital, a reduction in the Universal Service Obligation Fund, as well as a reduction in licencing fees.

Speaking at an industry event last year, Bharti Airtel’s CEO, Gopal Vittal bemoaned the harsh conditions under which Indian operators are being forced to operate under.

“The cost of doing business here has to come down. The spectrum usage charges, the taxes, the litigation that the industry is subjected to, the USO fund that is just sitting with the government unused, are all constraining the industry,” he said.

“If you look at the investment that we are making for 4G, for every 100 rupees that we earn, we spend 34 rupees on capex. For most other companies in this industry, that figure would be closer to 16 or 17 rupees,” he added.

Vittal’s comments at the ET 5G Congress in Delhi were echoed by senior executives from Vodafone Idea and Reliance Jio, who were united in their assertion that the Indian government must act now if it is serious about preserving a healthy, competitive telecommunications sector in the country.

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