Exit Issues Plague Small Players

The mega-consolidation in the telecom sector has started to unfold in the most gruesome way for fringe players who are finding it challenging even to wind up operations. According to reports, Norwegian telco Telenor may be forced to file for bankruptcy if it fails to secure regulatory approvals for acquisition by market leader Airtel. Telenor filing for bankruptcy could also jeopardise Airtel's plans to strengthen its position in the three-player telecom fight.

Earlier, Chennai-based Aircel filed for bankruptcy under NCLT after its failed attempts to settle the matter with lenders. Aircel and its units have an estimated debt of `50,000 crore that it owes to financial and operational lenders.

As consumers shift to big operators, telcos such as Telenor and Aircel have been incurring heavy losses. The lenders, both unsecured and secured, are persuading the telcos to make use of the new bankruptcy law to pay back their dues. The role of the telecom department is not just to give relief to the existing telcos - as it did recently - but also to make it easier for others looking to exit.

Manu Kaushik