Cellular industry is on the brink of financial crisis with the accumulated losses at over Rs 7,100 crore (Rs 71 billion) mainly due to the government's policy of allowing basic operators to offer WLL (mobile) services, says Cellular Operators Association of India.   

"The grave financial situation of the cellular industry is evident from the mounting accumulated losses, which are increasing year-on-year, completely belying the impression created by the surging subscriber base.

Accumulated losses for the industry as of end-December 2002 were around Rs 7,100 crore," COAI said in a letter to telecom secretary Vinod Vaish.

The recent sharp drop in cellular mobile tariffs are completely unsustainable, COAI said, adding that this unsustainable level has come only because of the industry's attempt to combat unfair competition from WLL(M) services.

Asking the Department of Telecommunication and the Telecom Commission to carry out independent financial investigations to know the financial health of cellular industry, COAI said that government must come out with a stable policy and balance industry growth on sound commercial fundamentals to attract investments, while ensuring consumer interest.

As a result of the present financial situation, the industry is no longer able to generate the funds required for increased capital expenditure to service its growing subscriber base and provide quality service, T V Ramachandran, director general of COAI said in the letter.