Telecom sector in dire straits: Anil Ambani

MUMBAI: Billionaire Anil Ambani on Tuesday said the telecom sector is in intensive care and the government and lenders are most at risk from the deteriorating health of the industry.

Ambani, chairman of Reliance Communications Ltd (RCom), warned that the market is heading towards a monopoly. He also promised to get RCom out of its difficulties by March 2018, saying its lenders are supportive of all its actions. With the entry of elder brother Mukesh Ambani’s Reliance Jio, the market is “potentially” moving towards limited competition, Anil Ambani said, adding that he feared that it may turn into a monopoly.

“The wireless or mobility sector, from any dimension you look at, is in the ICCU. It is not in the general ward, it is not in the ICU,” Ambani said at Rcom’s annual general meeting. “It is a systemic threat for government, for its revenues, it’s a systemic threat for our banking sector and it is creative destruction of a sector.”

Noting that the number of operators has reduced to six from over a dozen over the years, there was a sharp erosion in competitive landscape where nearly all global companies who were here have exited.

“I am sure they see things that allow them to write off large amounts of money and exit India. It cannot be the power of the market that is forcing them to leave but it has got to be from other dimensions of the sector which is forcing them to leave,” he said. Ambani said fresh lending to the sector has completely halted after Reserve Bank’s caution to banks in April. He wondered how can the once-sunshine sector maintain service quality as it requires Rs1 trillion in investments annually. Warning that the industry is heading towards a monopolistic situation, he said “If customer is supreme and consumer is king, can we afford to be a oligopoly, a duopoly or a monopoly?”