The industry is also looking for refund of excess credit held up in GST, he said.
Mathews noted that these measures could help ease the liquidity situation on an immediate basis, and added that a long term relief package for telecom sector could follow subsequently.
Billionaire Kumar Mangalam Birla, head of India's biggest telecom company has sent an SOS to the government for deferring statutory payments in a sector that is not generating enough cash to even service loans. The Vodafone Idea Chief had also expressed concern over Rs 300 billion that is locked up on account of GST payment under 'reverse charge mechanism'.
Over the past few years, India's telecom market had become cut-throat where nearly a dozen players jostled for market share, pummelling the call rates to amongst the lowest in the world. Competition has only intensified since 2016, when Reliance Jio Infocomm, owned by India's richest man Mukesh Ambani, stormed into the market and offered free calls and dirt cheap data. This triggered consolidation in the industry.
Earlier this month, at its maiden earnings announcement as a joint entity, Vodafone Idea reported a consolidated loss of Rs 49.73 billion for the September quarter and announced a fund infusion of Rs 250 billion to help it take on brutal competition.
Bharti Airtel too has reported a drop in consolidated net profit for the 10th straight quarter as losses on mainstay India business widened due to pricing pressure from aggressive competition. Overall, its consolidated net profit of Rs 118.8 crore in July-September represented a drop of about 65 per cent from Rs 3.43 billion in the year-ago period.
Airtel's loss from India operations (before exceptional items) mounted to Rs 16.46 billion in the second quarter of the current fiscal compared to about Rs 9.4 billion in the preceding three-month period.
In fact, Moody's Investors Service recently placed Bharti Airtel's rating on review for downgrade, following low levels of profitability and expectation of weak cash flow.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.