Vodafone Idea 4G Network to Suffer As Telco Focuses on Paying AGR Dues

Out of all the telecom operators in the industry right now, Vodafone Idea is the worst hit with financial troubles and the latest AGR dues. As per a new report from ETTelecom, Vodafone Idea is putting its plans of 4G network expansion and network modernisation on hold to focus on payment of dues which it has to make in late January, as per people aware of the matter. It is worth noting that Vodafone Idea has already said that it would have to close operations if it does not get any relief from the government for the Rs 53,000 crore which it has to pay to the Department of Telecommunications (DoT) on account of Adjusted Gross Revenue (AGR) decision which was passed by the Supreme Court on October 24. The Apex Court had passed the verdict which included revenue from non-core services into the AGR, based on which the telecom companies and the spectrum licensees pay license fees, spectrum usage charges, and the interests on these dues.

Vodafone Might Hold Network Expansion

As per the industry insiders, gear manufacturers have also got dues to recover from the telecom companies, which includes Vodafone Idea. These gear manufacturers include Huawei, Nokia, Ericsson, and ZTE, and these companies are now also concerned about the dues which they have to recover from VIL. A person aware of the matter remarked, “While existing orders are being fulfilled by the vendors, Vodafone Idea has put its new 4G expansion plans for greenfield sites on other major technology-driven investments on hold.” However, Vodafone Idea has held its ground and said that it continues to operate with its vendors normally, as it has been doing as usual. When posed with questions, the gear vendors, Huawei, Ericsson, ZTE, and Nokia did not return any answers.

Vodafone Idea Network to Get Hit Amidst AGR Woes

Not only Vodafone Idea, but other non-telecom and telecom companies are looking at dues worth Rs 1.47 lakh crore or more which are to be paid in January. In the October 24 order, Supreme Court had told the telecom companies to pay the dues within 3 months of the order. The analysts have also voiced their concerns in unison saying that Vodafone is likely to keep its plans of 4G network expansion on the sidelines so that it can divert the investment towards payment of the dues. But, the road is not smooth for Vodafone Idea since the decision to halt network expansion might cause the subscribers to migrate to other telecom operators who are offering better services and network presence. Already Bharti Airtel and Reliance Jio have a lead over Vodafone Idea in this regard. While, Vodafone Idea 175,881 eNode–B or BTS under its name, Bharti Airtel and Reliance Jio, each have 326,744 and 746,147 respectively.

Gear Vendors Also Concerned About Retrieving Payments

Vodafone Idea is staring at dues worth Rs 53,000 crore, whereas Airtel’s dues have compiled up to be Rs 35,500 crore. As per the people aware of the matter, Bharti Airtel is also likely to slow down its 4G network expansion on the back of these massive dues. However, Airtel has denied any such claims saying that it continues expansion at the same pace.

The vendors of these telecom companies, especially Vodafone Idea, are also concerned about the payments. While in the case of ZTE, the payment terms are the easiest for Vodafone Idea. However, unlike ZTE and Huawei, the European vendors, Ericsson and Nokia have more exposure in the dealing, and they are wary of the payment terms and are likely to seek immediate clarification.

Arpit Sharma

Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

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Arpit Sharma