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Tag: telecom sector

  • Bharti Telecom needs Airtel’s cash flow boost to tame its debt monster

    Bharti Telecom needs Airtel’s cash flow boost to tame its debt monster

    MUMBAI: Bharti Telecom Ltd (BTL), the controlling entity of Bharti Airtel, is staring at a financial puzzle that needs urgent solving. With its debt ballooning to nearly Rs 38,000 crore, analysts say BTL needs a much bigger dividend payout from Airtel to keep its loan sharks at bay, according to a report in The Economic Times.

    BTL’s estimated annual finance cost stands at a staggering Rs 3,183.2 crore—far outpacing the modest dividend cheques of Rs 600.6 crore in FY23 and Rs 876.9 crore in FY24 from Airtel. The gap is wide, and unless Airtel loosens its purse strings, BTL might have to consider alternative moves, including a possible stake sale.

    BTL’s financial burden isn’t just a case of unfortunate circumstances—it’s self-inflicted. Over the years, the entity has been on a stock-buying spree, scooping up Airtel shares from its key stakeholders, Singapore Telecommunications (Singtel) and the Mittal family.

    As a result, BTL’s net debt has skyrocketed from Rs 15,900 crore in December 2022 to a massive Rs 37,800 crore in December 2024. In total, BTL has invested Rs 38,100 crore in securing a larger stake in India’s second-largest telco, including an initial Rs 1,900 crore commitment to Airtel’s October 2021 rights issue.

    Motilal Oswal, in a recent report, seen by ET, suggested that Airtel’s dividend per share would have to rise to at least Rs 14 in FY25—up from Rs 8 in FY24—just to cover BTL’s interest obligations. That’s a significant bump, and whether Airtel can afford such a steep increase remains a key question.

    Singtel currently owns a 49.44 per cent stake in BTL, while Bharti Enterprises, backed by the Mittal family, holds a 50.56 per cent share. Both have gradually shifted their direct Airtel stakes into BTL, which has been funding these acquisitions through debt.

    ET also cited Ambit Capital’s warning that BTL has become dangerously dependent on Airtel’s dividends. If the telco doesn’t ramp up its payouts, BTL might be forced into a corner.

    “We expect the dues to be refinanced as BTL owns a 40.47 per cent stake in Airtel. But given (BTL’s) rising debt-to-equity ratio, dividends from Airtel would have to be ramped up significantly over the next few years or there could be some risk of a stake sale by BTL,” noted Motilal Oswal, later in the ET report.

    The numbers are daunting. BTL’s debt-to-equity ratio has surged to 5.4x in December 2024, a far cry from the more manageable 0.24x in June 2022. Additionally, BTL faces Rs 21,500 crore in upcoming debt repayments between September 2025 and February 2026.

    BTL isn’t out of the woods yet. It still needs to cough up another Rs 5,800 crore for Airtel’s pending October 2021 rights issue calls, which means the dividend pressure isn’t going away anytime soon. Airtel, for its part, raised Rs 5,247 crore in the first tranche of its Rs 21,000 crore rights issue but postponed further calls, citing sufficient cash reserves.

    Currently, Singtel and the Mittal family collectively own 29.49 per cent and 22.93 per cent of Airtel, respectively, through both direct and indirect holdings, much of which is routed via BTL. However, it remains unclear how much of their stake they plan to keep under the BTL umbrella.

    For now, Bharti Telecom’s financial health hangs on a delicate balance—can Airtel come to the rescue, or will the mounting debt force a radical shift in ownership structure? The telecom industry is watching.

  • Vodafone Idea misses Rs 6,090 crore spectrum payment—Now what?

    Vodafone Idea misses Rs 6,090 crore spectrum payment—Now what?

    MUMBAI: Another day, another Vodafone Idea financial hurdle. Akshay Moondra led telco, already walking a tightrope, has failed to submit a hefty Rs 6,090.7 crore bank guarantee or make a cash payment of Rs 5,493.2 crore to the department of telecommunications (DoT) for the 2015 spectrum auction shortfall, according to a report in The Economic Times.

    The deadline? 10 March.

    The result? No payment.

    And now, the government isn’t exactly thrilled, “We will see what action can be taken in the coming couple of days,” an official privy to the matter told ET. In other words—brace for impact. The DoT has not granted any extension so far, keeping Vodafone Idea on tenterhooks.

    The government had earlier attempted to throw the financially embattled telco a lifeline by waiving off bank guarantees (BGs) worth Rs 33,000 crore for past spectrum auctions across the private telecom giants—Reliance Jio, Bharti Airtel, and Vodafone Idea (Vi). Out of this, Vi had been the biggest beneficiary, with Rs 24,800 crore in waivers. However, the fine print required Vi to still cough up cash or submit a BG for the 2015 auction, where it had a one-time partial shortfall.

    Meanwhile, competitors Bharti Airtel and Reliance Jio had no such obligations, as their payments had already exceeded the pro-rata value of their spectrum use. Vi, however, was left holding the bag.

    Now, what happens? The ball is in the government’s court.

    With no payment in sight and no extension announced, DoT may be forced to take action. Will it demand strict penalties? Will it extend the deadline in an act of mercy? No one knows just yet. But for Vi, already struggling with debt and subscriber losses, another financial setback is the last thing it needs.

    ET in their report mentioned that queries sent to Vodafone Idea remained unanswered at the time of going to press. Given the company’s track record, it’s anyone’s guess whether the telco will come up with the funds or find itself in even deeper trouble.

  • Reliance Communications comprehensive loses amount to Rs 2,068 crore in Q3

    Reliance Communications comprehensive loses amount to Rs 2,068 crore in Q3

    MUMBAI: Reliance Communications Ltd (RCom.), once a dominant force in the Indian telecom sector, continues its painful spiral into financial oblivion. The latest Q3 FY25 results make for grim reading, with deepening losses, shrinking revenues, and an insolvency process that looks more like a never-ending courtroom drama. The company, under corporate insolvency resolution since 2019, posted a staggering net loss of Rs 2,068 crore for the quarter ending 31 December 2024, further extending its financial nightmare.

    But is there a miracle in sight? Or is RCom. doomed to be a cautionary tale in corporate history?

    Standalone Results

    RCom.’s revenue from operations in Q3 FY25 stood at Rs 65 crore, marginally slipping from Rs 66 crore in the previous quarter. Compared to Rs 71 crore in the same period last year, the company seems to be on a never-ending treadmill-moving, but going nowhere. The nine-month revenue isn’t offering much comfort either, standing at Rs 206 crore, a dip from Rs 220 crore in FY24. With operations at a standstill and no meaningful revenue streams, RCom.’s survival depends on asset monetisation. However, that process has been moving at the pace of a turtle on vacation.

    Consolidated Results

    RCom.’s financials for Q3 reveal a disaster unfolding in slow motion. If numbers could scream, these would be deafening.

    RCom.’s profit after tax (PAT) might as well be renamed loss after tax, as it posted a net loss of Rs 2323 crore for Q3 and a whopping Rs 6779 crore for the nine-month period. The losses are on autopilot, and there’s no emergency landing in sight. The EBITDA situation? Let’s just say it stands for “Empty Bucket DA”. There’s no sign of improvement, and the company continues to hemorrhage cash.

    Revenue from operations came in at Rs 87 crore for Q3, which, in telecom terms, is barely enough to keep the call centers running. The nine-month revenue stands at Rs 272 crore, proving that RCom.’s once-mighty earnings have taken a permanent vacation.

    If you’re an RCom. shareholder, consider looking away. The earnings per share (EPS) before exceptional items was (Rs 8.67) per share for Q3 and (Rs 25.10) per share for the nine-month period. After exceptional items? Let’s not even go there.

    To top it all off, the comprehensive loss for Q3 stood at Rs 2,373 crore, ballooning to Rs 6,878 crore for the nine-month period-because apparently, one kind of loss just wasn’t enough.

    The financial report reads less like a balance sheet and more like a horror novel. With no operational revenue and a debt mountain that refuses to shrink, the road ahead is looking rockier than ever.

    Discontinued Operations

    RCom.’s discontinued operations, including its wireless spectrum, towers, fibre, and media convergence nodes, continue to be the financial equivalent of quicksand. Despite being classified as “held for sale” since 2018, these assets remain unsold, haunting the company’s balance sheet like a ghost that refuses to be exorcised.

    The real horror story lies in the discontinued operations segment, where the company booked a massive provision of Rs 1,840 crore towards license and spectrum fees, sending the total net loss soaring to Rs 2,068 crore. For the nine-month period, RCom.’s total losses ballooned to Rs 6,012 crore, with discontinued operations contributing Rs 5,874 crore in losses. If you’re looking for signs of improvement, well, there aren’t any-the loss for the same period last year was Rs 6,232 crore.

    The segment’s revenue was a pathetic Rs 3 crore, against expenses of Rs 160 crore, leading to a Rs 156 crore loss. Making matters worse, the company has not accounted for interest on loans amounting to Rs 1,327 crore for Q3, further distorting its actual financial position.

    Debt and Insolvency

    RCom.’s financial position is about as stable as a house of cards in a hurricane. The company has defaulted on both interest and principal payments for years. Its total debts now exceed total assets, with a debt-to-assets ratio of 1.02. Net worth? Completely wiped out, standing at a shocking negative Rs 68,490 crore as of December 31, 2024.

    The insolvency resolution process remains stuck in legal limbo, with creditors desperately waiting for some sort of recovery. But with Supreme Court and NCLT hearings stretching on indefinitely, they might be waiting for a long, long time.

    Segment-wise performance

    . Telecom services: With just Rs 65 crore in revenue, the core business has all but collapsed. The segment continues to operate at a loss, and there’s no revival plan in sight.

    . Infrastructure and enterprise solutions: This segment is in hibernation mode, waiting for the insolvency proceedings to play out.

    .  Discontinued operations: The spectrum, towers, and fibre assets remain stranded, with no buyers in sight, making them a financial black hole.

    With no revenue growth, no operational revival, and mounting liabilities, RCom.’s future looks about as promising as a sinking ship without a lifeboat. The resolution process remains entangled in legal battles, and the much-needed asset sales haven’t made any progress. Creditors are frustrated, and shareholders have zero hope of recovery.

    Unless a miraculous acquisition or restructuring deal materialises, RCom. is likely to become a footnote in India’s corporate history-a grim reminder of how unchecked expansion, debt mismanagement, and regulatory battles can sink even the biggest players.

  • ARPU target 200; Indian mobile subscribers trudge along at Rs 94.87

    ARPU target 200; Indian mobile subscribers trudge along at Rs 94.87

    Mumbai: Indian mobile subscribers consumed 11.76 Gb of data on average per month and generated an average revenue per user (ARPU) of Rs 94.87 at the end of December 2020, according to Telecom Regulatory Authority of India (TRAI).

    At a press conference earlier this month, Bharti Airtel chairman Sunil Mittal stressed the importance of hiking tariffs and bringing ARPUs to at least Rs 200 by the end of the financial year 2022, for the sustainable growth of the sector.

    ARPU per month has increased from Rs 74.88 in the year 2019 to Rs 94.87 in 2020 and minutes of usage has increased from 701 minutes to 759 minutes in the same period. ARPU for post-paid service customers decreased from Rs 259.02 to Rs 226.83 while for prepaid service customers, it increased from Rs 66.48 to Rs 88.37. The total gross revenue of the telecom sector has increased from Rs 2,43,702 crore to Rs 2,74,208 crore.

    Notably, revenues from data usage and calls have almost doubled. Revenue from data usage has increased from Rs 42.37 to Rs 81.81 whereas revenue from calls has grown from Rs 8.12 to Rs 17.72. Rental revenue has sharply declined from Rs 31.07 to Rs 0.95, as per TRAI.

    Mobile data usage has grown by 35.6 per cent year-on-year (YoY). The total revenue from wireless data usage increased from Rs 59,334 crore to Rs 113,156 crore with a yearly growth rate of 90.71 per cent. The ARPUs for wireless data usage alone increased from Rs 76.59 to Rs 128.61.

    Airtel reported ARPUs of Rs 121 at the end of December 2020 as per the company’s annual report. In their recent quarterly earnings report, the company disclosed that ARPUs had increased to Rs 146. On the other hand, Reliance Jio and Vodafone Idea reported ARPUs of Rs 138 and Rs 104, at the end of the fourth quarter for FY 2021.

    India’s ARPUs are the lowest in the world at $1.8 whereas countries like Brazil, China, EU and the US ARPUs stand at $4.6, $6.7, $12.1, and $37.8, respectively. Indian mobile customers consume more Gb of data than any of these countries (GSMA Intelligence Database, Sept 2020). While consumers get more benefits and value from unlimited voice and daily data allowances, compared to five years ago, India’s ARPUs are actually lower in comparison to historic trends.

    The ARPU erosion is due to telecom operators aggressively defending their subscriber base by selling heavily discounted voice plans with bundled data despite tremendous growth in the volume of voice and data usage in the last few years. There has been an industry-wide call to hike the floor prices which prevents telcos from undercutting each other across various services.

    Recently, the telecom players Jio, Airtel and Vodafone Idea took some solace as the government announced relief measures for the sector including a moratorium of four years on interest rates related to payment of AGR dues. It also announced 100 per cent foreign direct investment (FDI) in the sector and made it easier to get clearance for tower installation.

    India’s wireless internet subscribers grew by 10.52 per cent YoY and wired internet subscribers grew by 14.07 per cent. The number of wireless internet subscribers grew from 696.36 million to 769.64 million, where wired internet subscribers grew from 22.39 million to 25.54 million in December 2020.

    The total number of internet subscribers grew to 795.18 million, with Reliance Jio, Bharti Airtel, Vodafone Idea and BSNL having 51.6 per cent, 25.5 per cent, 17.3 per cent and 4.1 per cent of the market share, respectively.

  • India to have a billion unique mobile subscribers by ’20; Delhi talent favourite

    India to have a billion unique mobile subscribers by ’20; Delhi talent favourite

    MUMBAI: The contribution of mobile industry to the country’s gross domestic product (GDP) amounts to approximately US$140 billion (Rs 9,60,783 crore), the Department of Industrial Policy and Promotion and the Department of Telecom recently reported. India’s current GDP employs over four million people. At present, at 6.5 per cent, the government of India has stated that the mobile industry’s contribution is likely to rise to 8.2 per cent by 2020.

    According to the report, India is expected to cross the one billion unique mobile phone subscribers mark by 2020. India will also see an increase in adoption of 4G services with number of 4G connections estimated to grow to 280 million by 2020 from just three million in 2015. Further, the report claimed that the mobile industry is expected to add 800,000 more jobs.

    A survey by human resource (HR) solutions company PeopleStrong suggested that Delhi has emerged as the most preferred region for hiring in telecom and allied sectors. Hiring intent in this sector is expected to increase from 16% in 2016 to 20% in 2017.

    In 2011-12, telecom sector contributed about 2.1 per cent of GDP with revenue of Rs 1,85,930 crore while, due to the increase in revenue next year to Rs 2,07,498 crore, the net contribution came down to 2.07 per cent. The revenue generated by the telecom sector in 2014-15 was Rs 2,42,900 crore, making it a contribution of 1.94 per cent to GDP.

    Vodafone tops the list of investments with Rs 10,299 crore ($1,500.79 million) followed by Videocon International Electronics with Rs 4924 crore ($719.76 million). At third position stands Telenor at $573.15 million followed by Sistema Shyam Teleservices $451.83 million, Bharti Infratel $240.37 million, and Idea Cellular $123.22 million.

    PeopleStrong CEO Pankaj Bansal said Delhi’s emergence for hiring could be attributed to the availability of the engineering and general graduate talent pool in this area or to the fact that many telecom and allied industries are headquartered in Delhi NCR.

  • India to have a billion unique mobile subscribers by ’20; Delhi talent favourite

    India to have a billion unique mobile subscribers by ’20; Delhi talent favourite

    MUMBAI: The contribution of mobile industry to the country’s gross domestic product (GDP) amounts to approximately US$140 billion (Rs 9,60,783 crore), the Department of Industrial Policy and Promotion and the Department of Telecom recently reported. India’s current GDP employs over four million people. At present, at 6.5 per cent, the government of India has stated that the mobile industry’s contribution is likely to rise to 8.2 per cent by 2020.

    According to the report, India is expected to cross the one billion unique mobile phone subscribers mark by 2020. India will also see an increase in adoption of 4G services with number of 4G connections estimated to grow to 280 million by 2020 from just three million in 2015. Further, the report claimed that the mobile industry is expected to add 800,000 more jobs.

    A survey by human resource (HR) solutions company PeopleStrong suggested that Delhi has emerged as the most preferred region for hiring in telecom and allied sectors. Hiring intent in this sector is expected to increase from 16% in 2016 to 20% in 2017.

    In 2011-12, telecom sector contributed about 2.1 per cent of GDP with revenue of Rs 1,85,930 crore while, due to the increase in revenue next year to Rs 2,07,498 crore, the net contribution came down to 2.07 per cent. The revenue generated by the telecom sector in 2014-15 was Rs 2,42,900 crore, making it a contribution of 1.94 per cent to GDP.

    Vodafone tops the list of investments with Rs 10,299 crore ($1,500.79 million) followed by Videocon International Electronics with Rs 4924 crore ($719.76 million). At third position stands Telenor at $573.15 million followed by Sistema Shyam Teleservices $451.83 million, Bharti Infratel $240.37 million, and Idea Cellular $123.22 million.

    PeopleStrong CEO Pankaj Bansal said Delhi’s emergence for hiring could be attributed to the availability of the engineering and general graduate talent pool in this area or to the fact that many telecom and allied industries are headquartered in Delhi NCR.