Foreign investors turn back on Indian telcos

The Indian telecom service providers are finding it hard to bargain for credit from multinational bankers, investors and wealth management companies to fund infrastructure expansion, following domestic lenders' refusal ahead of upcoming spectrum auction across multiple bands including airwaves for the next-generation services.

"Right now, they (bankers) are not very favorably looking at the industry and even the country, and say that they don't see any upside now and even the growth in the economy is slowing down. So, that is causing worry for foreign investors," Rajan S Mathews, director-general of the Cellular Operators Association of India (COAI) told ETT.

Delhi-based telecom group COAI represents Vodafone Idea, Bharti Airtel and Reliance Jio.

The development, however, can further cease the growth of country's telecom sector, which is already hit by a double whammy with a cumulative debt rising to more than Rs 7.5 lakh crore and revenue hitting the lowest average.

The overseas investors, according to the telecom group, also consider the country's economic health, besides sectoral parameters, which in the current situation both are on a steep decline.
Paris-based Organisation of Economic Cooperation and Development (OECD) has slashed India's economic growth forecast to 5.9%, from 7.2% earlier for 2019-20.

Mathews further said that that the banking has "more or less dried up" domestically. Unfortunately, the banks are going through the non-performing assets (NPA) process while other companies are having difficulty in servicing their debt. So the banks are not seeing any positive aspect, with revenue continues to decline, and competition is just horrendous,"

The amount of money which is principally coming in, according to him, is through equity offerings at both Bharti Airtel and Vodafone Idea with lending becoming a big headache for telecom carriers since risky enterprises and industries are no more considered.

The telcos were though pinning high hopes on some of the Singapore and Middle East-based sovereign wealth funds and capital investment firms such as the Bank of America but have so far hit the wall.

Given the current situation, Mathew said, it was a high time for the government to give a "serious consideration" to addressing the financial problems of the industry.

The industry that has Rs 35,000 crore locked in the Goods and Service Tax (GST) regime has been asking for a refund to reinvest into networks. Despite a repeated push from the telecom minister Ravi Shankar Prasad, the Finance Ministry, according to the group, looks otherwise.

The industry predominantly led by Bharti Airtel and Vodafone Idea, has already expressed its inability to bid in the upcoming spectrum sale terming the base price of fifth-generation or 5G airwaves as exorbitant in the absence of any financial impetus from the Narendra Modi government.