SC judgment last straw in contributing to telecom financial distress: COAI

New Delhi [India], Oct 24: The telecom sector on Thursday expressed deep disappointment over the Supreme Court’s judgment on the definition of adjusted gross revenue (AGR) which it said will negatively impact incumbent operators by over Rs 92,000 crore.

“The Supreme Court’s judgment is the last straw in contributing to financial distress,” said Rajan S Mathews, Director General of the Cellular Operators Association of India (COAI). “It remains to be seen whether the industry will be able to recover from this setback. The immense financial pressure on the sector will also adversely impact Digital India rollout,” he said in a statement.

The sector is already reeling under a daunting debt of Rs four lakh crore and is in dire financial straits as operators are making negative returns on their investments, said Mathews. “The telecom earnings before interest, tax, depreciation, and amortisation (EBITDA) continue to contract while the interest expense of industry continues to increase.”

The taxes and levies for the Indian telecom sector ranging from 29 to 32 per cent are one of the highest globally, he said. “The sector has the lowest tariffs in the world backed by investment of over Rs 10 lakh crore in setting up world-class mobile networks over the past 20 years, but is going through one of its most disruptive phases,” said Mathews.

With over 1.19 billion subscribers, the telecom sector is a key contributor to the Indian economy in terms of consumer benefit, employment, revenue generation and contributes 6.5 per cent to the GDP, according to the COAI. The association represents leading telecom, internet, technology, and digital services companies.

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