Time for tariff hike in telecom sector, need to reduce tax burden on industry: Sunil Mittal

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New Delhi: A day after telecom service provider Airtel’s chairman Sunil Bharti Mittal announced a capital raising of Rs 21,000 crore through a rights issue, on Monday, he strongly advocated tariff hike and tax cuts to protect the telecom industry. While 35 per cent of the industry revenue goes to the government in taxes and duties, the telecom sector is saddled with an extraordinary debt burden of AGR (adjusted gross revenue) dues and spectrum payments.

Mittal also said that Airtel’s Rs 21,000-crore fund-raising plan will allow the company to “go away from the normal course of business” by accelerating investments for 5G services, fiber and data center business and take advantage of huge opportunities. will gain help in. He said that 5G services will start in India in the second half of next year.

Mittal said there would be no better time for Airtel to “move fast”, infuse more capital into its system and benefit from the market as India is growing rapidly and adopting more digital services. He said postponing the finance raising exercise to next year could be dangerous for the company’s future as huge growth opportunities are looking at the company “from all sides”.

Mittal said, “We will make a huge mistake if we continue to operate normally at this point in time.” He said Airtel has an “extraordinary debt burden”. “The burden of AGR, spectrum payment burden has created an extraordinary debt burden on the company,” Mittal said. He added that the company wants to improve leverage of debt and access capital for growth when needed.

The combination of asset monetization and sound financials will put Airtel in a comfortable position with respect to its debt in the coming two-three years. The consolidated net debt of the company, including debt linked to leases, stood at Rs 1,59,622 crore as on June 30, 2021. He said, “People are consuming an average of 16 GB data per month per user.

The time has come to raise tariffs to make the industry viable and more importantly, for growth in more technology sectors, it is necessary to have a good and reasonable return on capital so that more networks can be started and stability in the future. become a more viable model.”

Mittal emphasized that the industry needs a “right economic model”, and added that it was regrettable that “for too long, we have competed by raising this industry at very low pricing levels.” He said the taxes levied on the telecom sector are very high and India has to “reduce the tax and burden on the industry” if it is to realize its digital dream.

Mittal clarified that Airtel will not shy away from increasing the charges. He argued that the change in charges by Airtel in the past few months “testifies” that the company’s “patience has really run out”.

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Bhagyashree Soni
Bhagyashree Soni
Bhagyashree Soni is a software engineer with soft writing skills. She is a degree holder from the International School of Entrepreneurial Leadership. She has been a state-level badminton champion and chess player. A woman with a forthright attitude enjoys her writing passion as her chosen career. Writing in the context of feminism, social-cause and entreprenurship is her forte.
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