The telecom sector needs a minimum of Rs 100,000 cr a year to expand and maintain the quality of services
Telecom sector is under stress and the banks are not extending any credit, Reliance Group chairman Anil Ambani said on Tuesday.
"The Reserve Bank of India in April asked all banks to be cautious on telecom. Banks are now not extending any credit," Ambani told the Reliance Communications (RCom) annual general meeting here.
The telecom sector needs a minimum of Rs 100,000 crore a year to expand and maintain the quality of services. "A constructive solution with all players needs to be found. As far as RCom is concerned, we have a transformation program in place and running. Government is also seized of the stress and is looking into it to find solutions," he said.
"The sector has transformed India as per late Dhirubhai Ambani's vision. The sector has brought mobility to a billion people, with only one winner - the customer," Ambani added.
The company has received full support of its lenders and shareholders and one unsecured lender has approached NCLT, he said.
Earlier this month, Ericsson had filed for insolvency in the NCLT under the newly-formed Insolvency and Bankruptcy Code to recover Rs 1,150 crore from RCom for supply of services and equipment.
Ambani said, "We will take matters to the logical conclusion. We have more than one plan, we have back-up options. There are multiple options to ensure we have appropriate solutions."
There was a sharp erosion in the competitive landscape and some overseas operators have left the country. "Over the last year, operator after the operator has seen value erosion and large losses. I call this creative destruction of a sector, normally passed off as a disruptive factor," Ambani added.
"Telecom sector is moving towards a monopoly, oligopoly: Is that what the customers want?," he said.
"We will ensure that within this financial year, we will have clarity. To reiterate, only the wireless business is in some trouble. Other businesses are robust and growing well in India and globally," Ambani said.
Currently, RCom is in the process of strategic debt restructuring under which banks will not collect interest till December this year.
RCom plans to complete the merger of its wireless business with Aircel and the sale of its telecom towers to Brookfield before the end of this year.
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