Connect with us

Daily News

Indian Telcos To Face New Wave of Financial Challenges Following DoT Probe

The Department of Telecoms is to open an investigation into historic under reporting of revenues in India’s telecoms sector.

India’s beleaguered telecoms operators must brace themselves for a new round of financial challenges, according to ratings agency Fitch. According to a report published by Fitch, India’s Department of Telecoms intends to launch a fresh audit of the country’s mobile operators, covering the period 2012-2018, to ascertain whether telcos have been under reporting their revenues. Indian telcos are already struggling under the weight of huge levels of debt, which are being exacerbated by ultra-competitive market conditions.

The audit would be opposed by the operators, which are certain to again challenge the decision through the courts. The DoT had already twice commenced audit investigations into the books of the operators; audits of FY2006–FY2008 (April–March), and FY2011–FY2015 accounts had uncovered as much as INR1.07tn ($14 .7bn) in under-reported revenues , prompting the Comptroller and Auditor General (CAG) to serve notices for INR258.8bn ($3.6bn) in unpaid dues . Operators have challenged the CAG’s findings, while the courts have yet to decide on the matter. We expect that industry cash flow will be affected if the courts allow the DoT to collect the additional spectrum fees, given pre-existing commitments to capital expansion,” the report said.

While the Indian government has been keen to work with the industry to overcome these issues, Fitch’s report says that it is unlikely that the government will excuse or reduce any subsequent debts that arise from historic under reporting of revenues.

“The Indian government is unlikely to provide any financial relief for embattled operators as raising funds from the telecoms sector will allow it to address revenue collection shortfalls in other areas. The state has already slashed the goods and services tax (GST) across a wide range of consumer goods and has ramped up agricultural subsidies, providing reason for us to believe it will overshoot its 3.3 per cent fiscal deficit target for FY2018-19,” the report concluded.  – Total Telecom

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Copyright © 2024 Communications Today

error: Content is protected !!