State Bank of India: Nobody wants to kill India’s telecoms sector

Published: 24 February 2020 - 11:07 a.m.

The chairman of the State Bank of India has acknowledged that the financial sector must tread lightly while attempting to reclaim over $20.4 billion (1.47 lakh crore rupees) in outstanding debt from the country’s beleaguered telecoms sector.

"Nobody wants to kill the sector, let me be very clear," SBI chairman, Rajnish Kumar, told journalists at the Economic Times of India.

According to the ET report, the State Bank of India has outstanding loans of around $4.03 billion (29,000 crore rupees) with the country’s telecoms sector and an additional $1.94 billion (14,000 crore rupees) in bank guarantees.

India remains one of the most challenging and competitive telecoms markets anywhere in the world, with operators struggling to balance the duelling demands of wafer thin profit margins and the monumental capital investment demand involved in preparing the way for 5G.

Late last year, a Supreme Court ruling over the way operators calculate their adjusted growth revenues saddled the country’s mobile network operators with a combined debt of around $13 billion.

The country’s second largest telco by subscribers, Vodafone Idea, has been particularly badly exposed to this ruling and is struggling to remain solvent in the face of relentless financial pressure.

The country’s third largest telco, Bharti Airtel, is currently undergoing a self-assessment exercise to determine its exposure to the AGR ruling, which is expected to amount to at least $3.5 billion, inclusive of charges and penalties.

Click here to add your comment

Please add your comment below
Name
Country
Email
Your email address will not be published
Captcha