Indian operator group Vodafone Idea is reportedly looking to refinance its massive debt, while the government mulls a bailout for the whole sector.

The Indian telecoms sector is a bit of a mess these days. The arrival of Reliance Jio lowered prices and squeezed profits at a time when capital investment was most needed. Meanwhile the government seems to be doing everything it can to make the situation worse by first giving assistance to some operators, while further hindering others. You could be forgiven for thinking the Indian state is determined to drive incumbents Vodafone Idea and Bharti Airtel out of business.

So it comes as no great surprise to read reports that Vodafone Idea is struggling to meet its debt obligations and wants to renegotiate the terms. It should be stressed, however, that this report is based on anonymous sources and a spokesperson for Vodafone Idea has said the company hasn’t asked lenders to rework payment terms, so it all comes down to who you believe.

Even if Vodafone Idea hasn’t explicitly sought renegotiation with its creditors, with $14 billion debt and a fiendishly difficult trading environment it’s hard to believe it won’t soon. The merger seems to have bought the respective companies precious little time, but massive potential rewards await those companies that can ride out the current storm in what will soon be the world’s most populous country.

It seems possible that the Indian government is belatedly realising what a catastrophe the collapse of one on the few remaining national operator groups would be and, according to another report, has created a panel to look into a bailout for the whole sector. How much of this will be straight cash as opposed to regulatory concessions remains to be seen, but it the mere creation of this panel indicates an acknowledgement by the state that it hasn’t managed the sector very well.

Allowing the creation of Reliance Jio was fine, but it seemed to get a bigger regulatory helping hand than, in hindsight, seems appropriate for a company bankrolled by India’s richest person. At the same time the state is still active in the sector itself and seems to have been using the incumbents as a cash cow. The role of this panel should be to correct some of those mistakes, but we’ve seen little from the Indian state to make us optimistic about it succeeding.