Telecom Department of India recently introduced a new section of investment which decreases the financial stress of huge amount of loan and falling return for the Telecom sector. Basically, this investment facilitation center came out to provide relief to those companies who are suffering from huge financial crunch or whose investment has dried up. All telecom companies are suffering because of a renowned telecom operator, who is dominating the Industry with its unlimited data offer. Prompting the entire telecom industry to come out and fight against the free service.
The main objective of creating this investment facilitation center is to support the telecom sector and don’t let this sector to become another steel sector. After Jio entered this highly competitive sector, the life of the existing operators became rather difficult. Many foreign companies have exited the market after facing cut-throat competition from Reliance. The move comes at a time when the industry is under a huge debt and the steep price war after Jio’s launch last September, has forced Telco to consolidate amid sharply falling returns on capital employed.
A UK based Telecom company, which has been among the highest Foreign Direct Investors in the sector through its local telecom unit, has decided to invest in India’s business proceedings, spooked by the brutal competition that has dragged its group financials. This reputed telecom company is planning on merge with Idea Cellular, to form a joint venture to take on the active competition.
In this debt laden industry, some of the operators are also trying to restructure their debt. Quite a few Teleservices have approached Banks to restructure their amount of debt for underscoring the financial stress in the competitive business. Telco’s, said, “We will balance debt levels by monetizing non-core assets to mitigate the pressure on credit profiles.”
This telecom investment process will help the companies who need the loan to survive in this burgeoning market competition. According to Indian Government policies, FDI in Telecom services is allowed up to 49 percent through automatic route, while it permits above 49 percent through government route. This will, in turn, increase the scope of foreign investment in the country and improve the structure of Telecom business in the long run.
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