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Reliance Jio Says Rivals' Failure to Invest in Tech Causing Financial Stress

Reliance Jio Says Rivals' Failure to Invest in Tech Causing Financial Stress

By Press Trust of India | Updated: 12 June 2017 13:33 IST

Highlights

Reliance Jio alleged rival telcos of not investing in new technology
They need to invest Rs. 1,25,000 crores, payback debt, & invest in tech
Jio met Inter-ministerial Group (IMG) to address the issue

Reliance Jio on Monday said telcos not investing in new technology and instead leveraging their balance sheet are themselves to blame for financial difficulties. Newcomer Reliance Jio, which met the Inter-ministerial Group (IMG) said operators need to raise funds by selling stake or invest in new technology through internal accruals.

Mukesh Ambani-owned Reliance Jio is the newest telecom operator in the country that opened its services to the general public last year, and since has added over 100 million users thanks to competitive tariffs and free voice calling that forced Jio rivals across to slash tariffs of their own, leading to a stress on their financial resources.

"Operators (excluding Jio) need to invest Rs. 1,25,000 crores, payback debt and they need to invest in technology, as growth is happening in data...they can do this by selling stake," said a senior Jio official who did not want to be named. Stating that the financial stress being faced by operators was "their own creation", the official said the only policy intervention required is in form of reduction in GST rates, licence fee, and USO levies. Lowering of these levies can generate Rs. 20,000-25,000 crores additional EBITDA for the industry, the Jio official said after coming out from the 45-minute meeting with the IMG.

The IMG on Monday began consultation with operators as part of efforts to address the financial difficulties being faced by the sector. The telcos are reeling under a massive Rs. 4.6 lakh crore debt, and are facing pressure on revenue, profitability, and all other financial metrics in face of increasing competition intensified by the entry of Jio.

Over the next few days, the IMG will also meet other operators including Bharti Airtel, Vodafone and Idea Cellular, as well as top officials of telecom PSUs Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd.

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