Anil Ambani says telecom industry is in trouble, mergers will make it a monopoly
The Reliance Group chairperson said that the sector’s debt of Rs 9 lakh crore was in jeopardy because very few banks were ready to offer loans.
Reliance Group Chairperson Anil Ambani on Tuesday said that a wave of mergers in the telecom industry would reduce choices for Indians, The Economic Times reported. “The wireless sector, from a hugely customer-friendly, choice-driven, 10-player market is slowly moving towards what is referred to in economic terms as either oligopoly, duopoly or potentially a monopoly,” Ambani said while addressing shareholders. “Is that something 1.2 billion people in India deserve? Is that what customers really want?”
In March this year, the proposed merger between Idea Cellular and Vodafone India was approved by the boards of both companies. The merger will create the country’s largest telecom company with Rs 80,000 crore in revenue. In 2016, R-Com had announced plans to merge with Aircel. It also planned to sell off its telecom tower business to repay debts worth Rs 45,000 crore. But Ericsson’s bankruptcy petition against R-Com for recovery of Rs 1,555 crore had delayed the merger plans.
Ambani said that the telecom sector needed Rs 1 lakh crore to expand and “maintain quality of service,” according to Business Standard. “Where will the money come from?” He added that the sector’s debt of Rs 9 lakh crore was also in jeopardy because very few banks were ready to offer loans after the Reserve Bank of India asked lenders to be cautious.