Reliance Jio says incumbent telcos to be blamed for debt woes

Even as the incumbent telcos talk about decreasing profitability in business, the latest entrant on the block Reliance Jio feels that telecom continues to remain one of the highest profitable sectors with an Ebitda margin of 30 per cent and the 'so-called' financial stress has been caused by the old operators themselves as they did not invest in equity as well as in new technology but kept on taking more debt.

Jio, which presented its views while meeting the inter-ministerial group (IMG) today, is believed to have said though incumbent operators have made significant returns over the years, they have not invested in equity. Jio said the financial stress has been caused due to aggressive financing strategies and not investing in new technologies, even though the sector fundamentals remain robust.

Also Jio blamed the top three operators -- Airtel, Vodafone and Idea Cellular -- of cartelisation which led to the financial stress of smaller operators. Jio further added these three are now seeking relief by leveraging problems of smaller operators.

The incumbent or old telcos have blamed the free services offered by Jio to be the reason for the current woes and have sought government help to tide over the crisis. An IMG was formed to look into the telecom sector woes and the panel undertook its first meeting with industry today. Representatives from Jio, Reliance Communications, Airtel and Tata Teleservices presented their views in front of the panel.

During the panel's meeting, Jio said though there should be reduction in levies, the operators should also commit to make equity infusion and investment in new technologies as a priority.