New and old telecom operators were again at each other’s throats today with Reliance Jio accusing incumbents of milking the sector using borrowed money while the older players blamed free voice and data offering by the Mukesh Ambani firm for financial woes of the sector.
As an inter-ministerial group (IMG) began hearing operators on reasons for telecom sector being dragged towards loan defaults, Jio launched a scathing attack on Airtel, Vodafone India and Idea Cellular accusing them of cartelisation and blaming financial woes on their reluctance to use equity for investing into new technology.
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While the ‘big three’ will make presentations to the IMG on June 16, Reliance Communication has said that FY17 was the first time since inception that the industry’s revenue and operating profits declined, primarily because they were forced to match free offerings of the newcomer with deep pockets.
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Jio, on the other hand, blamed the incumbents for the financial woes saying they stretched the balancesheets through extensive borrowings without bringing in any equity money. While the Mukesh Ambani firm blamed availability of easy credit to buy spectrum for worsening the situation, other operators said reduced cashflows were hampering capacity of telecom companies.
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