COAI executive committee to discuss telecom industry's financial fortunes

The executive committee meeting of the cellular operators association (COAI), scheduled for March 17, is likely to discuss the issue of the deteriorating financial health of the industry.

The industry body is also planning to commission a third-party analysis on the financial health of the Indian telecom industry, which is facing huge debt and pressure on profitability, COAI Director General Rajan S Mathews told PTI.

"Besides the normal updates that happen in areas like eKYC, EMF, updates on legal cases, the COAI executive meet on March 17 is also expected to discuss the state of the financial health of the industry... What do we need to do in terms of interaction with the government, what is the way forward... All of that will be discussed, resources will be voted and committed on," Mathews said.

Stating that the industry is in a state of "flux", Mathews said, "The next 3-6 months are the time when the industry is really going to have to deal with the issue of how do we ensure the financial viability continues and what further consolidation could take place."

The industry will also be watching out for the "emerging industry construct around the number of players".

On the challenges facing the industry, he said, "We are having to deal with the whole issue of consolidation, what are the outcomes of various court cases, the regulatory environment... The other major issues are Trai papers on Net neutrality and interconnect charges."

Once the analysis is complete, an exercise that Mathews estimates will take a couple of weeks after commissioning, the COAI will make a representation to the government about measures that should be taken to ease the industry's burden. The prescriptions need to be "co-related with the health of the industry", he added.

"We are doing certain economic analysis because we want to make sure our representation is backed by factual verifiable data... We want it to be buttoned down in terms of having credible economic data that show the stressed nature of profitability, the debt overhang, and the fact that if this continues, there could be a cascading impact on other sectors," he said.

The country's largest telecom player, Bharti Airtel reported over 54 per cent fall in net profit at Rs 503.7 crore for the October-December 2016 quarter due to what it called "turbulence" from "predatory pricing by a new operator".

The new operator refers to Mukesh Ambani-led Reliance Jio. Airtel's consolidated income declined by 3 per cent in the said quarter.

Similarly, Idea Cellular logged a consolidated net loss of Rs 383.87 crore for the December 2016 quarter compared to a net profit of Rs 659.35 crore in the year-ago period.

The operator, which is in talks with Vodafone for a possible merger, saw its total income decreasing to Rs 8,706.36 crore for the said quarter, from Rs 9,032.43 crore in the same period in the previous year.