Fitch Ratings: Telcos Still Face Uncertainty Over Amount & Timing Of Payment Of Dues

Global rating company Fitch Ratings on Thursday said there is still uncertainty on the amount and timing of payment of the spectrum dues by telecom service providers arising out of the Supreme Court order.

The move comes after Department of Telecommunications (DoT) had issued a notice to telecom operators to pay their revenue share dues within three months as directed by the Supreme Court.

In an interview to CNBC-TV18, Nitin Soni, director – corporates, said, “The next procedure is that the Department of Telecommunication or the ministry decides and calculates the exact amount that needs to be paid by the industry and then they will issue a notice to the telecom companies.”

“We still have to see what the amount needs to be paid and by issuing notices, it will also show the intent of the government whether they are interested in providing any relief to the sector or now,” Soni said.

“DoT, Committee of Secretaries and Competitive Commission of India, all three need to work together on this issue and decide on what kind of relief and whether they want to provide relief or not, how much relief they want to give to the industry,” he added.

Further, Soni said the House has placed the rating of Bharti Airtel on -BBB on rating watch negative and if the company was to pay such a large amount – anywhere about $5-6 billion in the short-term, it would result into negative rating action.

When asked if the sector was headed towards a duopoly, he said, “If Vodafone-Idea was to pay such a large amount, then it would be in clear distress. Their ability to invest in capex would also have a shock and their sponsors would be wary of putting in more cash in the joint venture.”

“If not a duopoly, then definitely Vodafone-Idea would lose market share in such a scenario and Reliance Jio would gain a good part of that market share. Also, Bharti-Airtel would also get some market share,” Soni said.―CNBC TV18