Telecom sector under stress due to debt

Terming that entire telecom sector is undergoing stress due to tariff war and debt, the Economic Survey on Monday recommended rationalisation of the cost of spectrum and other assets procured through auctions.

Telecom sector is going through stress due to a huge debt pile, tariff war and irrational spectrum costs and called for policy measures to minimise over-bidding of assets during auctions.

"The crisis has also severely impacted investors, lenders, partners and vendors of these telecom companies," the survey said.

It also noted that FDI equity inflows (April-October) in top 10 sectors grew by 15 per cent, as compared to 0.8 per cent growth in total FDI equity inflows, mainly due to higher FDI in two sectors telecom and computer software and hardware.

The survey recommended rationalisation of the cost of spectrum and other assets procured through auctions.

Noting that the government is in the process of formulating the New Telecom Policy, the survey said, "The lesson is that policy design must minimise these costs wherever possible. More specifically, there should be greater reliance on using incentives and carrots than on sticks." The major themes that the policy shall try to address include regulatory and licensing frameworks impacting the sector, connectivity for all, quality of services, ease of doing business and absorption of new technologies including 5G and internet of things (IoT).

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