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    Home»News»Indian Govt Exploring Options in Telecom, What It Means for the Sector
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    Indian Govt Exploring Options in Telecom, What It Means for the Sector

    Lingraj SahuBy Lingraj Sahu15/January/2022No Comments3 Mins Read
    Indian Govt Exploring Options in Telecom, What It Means for the Sector

    India telecom operators Vodafone Idea Ltd (VIL), Tata Teleservices Ltd. (TTSL) and Tata Teleservices (Maharashtra) Ltd. (TTML) have proposed to the government a stake in the company in lieu of interest.

    The government may issue detailed guidelines within a month on converting interest liability on adjusted gross revenue (AGR) of telecom companies into equity. A senior central government official said the process of holding a stake in the three telecom companies against interest liability could be completed in a month. Debt-ridden companies Vodafone Idea Ltd. (VIL), Tata Teleservices Ltd. (TTSL), and Tata Teleservices (Maharashtra) Ltd. (TTML) has proposed to the government a stake in the company in lieu of interest.

    Indian Govt Exploring Options in Telecom

    The official said the details regarding the conversion of the outstanding payment into equity is to come from the finance ministry. The Department of Investment and Public Asset Management will work out the details and then forward them to the DoT. This process should not take more than a month.

    Last year, the government had announced a relief package for the telecom sector. Under this, Vodafone Idea Limited, Tata Teleservices Limited, and Tata Teleservices Maharashtra Limited have proposed to the government to convert their interest liabilities into equity.

    Indian Govt Exploring Options in Telecom

    On completion of this process, the government’s stake in VIL will be 35.8 percent and it will be the largest shareholder. Apart from this, its stake in both TTSL and TTML companies will be 9.5-9.5 percent. VIL estimates its interest liability on AGR to be around Rs 16,000 crore. This figure is around Rs 4,139 crore in the case of TTSL and Rs 850 crore for TTML.

    Telecom Minister Ashwini Vaishnav has said a day earlier that the principal amount liability of these companies will continue even if the outstanding liabilities are converted into equity. He said that the government would continue to be the only investor in these companies.

    Telecom Industry ARPU Levels to Reach New Heights

    As for the telecom sector in general, the relief package is going to make a big positive difference. On top of that, the telcos recently implemented prepaid tariff hikes, which will further help with the rise of industry ARPU. Along with the rise in ARPU, the revenues in the coming financial year should also grow.

    Indian Govt Exploring Options in Telecom

    “The industry implemented long-awaited tariff hikes which have the potential to improve the industry ARPU levels to around Rs. 170 by the end of FY2023. ICRA expects the industry revenues to grow by 18-20% in FY2023, followed by a growth of 10-12% in FY2024, which given the high operating leverage, is likely to translate in healthy expansion in operating profits, the same is projected to grow by around 30% in FY2023,” said Jain from ICRA.

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    Indian Telecom TATA Telecom TTML TTSL Vodafone Idea
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    Lingraj Sahu
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    Lingraj is one of the youngest members of TelecomByte, and a recent tech geek convert. When he's not churning out articles, you’ll find him watching sports, exploring new places, and listening to music.

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