Vodafone Idea and Airtel Might Have to Incur Massive Payouts if Not for Chinese Telecom Gear Deals

Vodafone Idea and Bharti Airtel will face financial distress in case of cancellation of equipment contracts from Huawei and ZTE

vodafone-idea-airtel-incur-massive-payouts-chinese

The ongoing geopolitical situations between India and China are showing adverse results in the telecom industry. Earlier the government was planning to stop Chinese telecom gear makers from supplying network to the state-owned telcos BSNL and MTNL. Not only this, but private telcos were also in the loop. However, if the private telcos will be barred from purchasing telecom gear from Chinese vendors, they will have to pay massive outstanding dues. As reported by ET Telecom, telco giants Vodafone Idea and Bharti Airtel could be burdened with $600-$650 million and $300 million respectively in vendor dues if they will be forced to terminate their contracts with Huawei and ZTE. As per industry executives, if the telecom operators Bharti Airtel and Vodafone Idea will terminate their contracts, Chinese vendors Huawei and ZTE will start recovering their money which the telcos owe them for gear supplies.

Telecom Operators Could Face Penalties from Chinese Gear Vendors

Both Bharti Airtel and Vodafone Idea could face penalties in case of termination of existing managed services and AMC contracts before time. Not only this, but Chinese vendors can also give a legal turn to the whole scenario. However, top industry executive states that both the telecom operators can legally counter any outstanding due settlement calls or fines.

Bharti Airtel is in Better Position to Clear Telecom Gear Dues

In case if the Chinese vendors ask for dues, Vodafone Idea could have to pay $450 million and around $200 million to Huawei and ZTE respectively. As of Bharti Airtel, the telco giant owes $300 million to Huawei for network gear purchase. Bharti Airtel spokesperson stated that the telco enjoys cordial relations with all the Chinese vendors and has enough cash reserves to clear vendor dues. Vodafone Idea who is struggling with AGR dues will face financial trouble in case if the Chinese vendors ask for their outstanding dues. However, all the telecom operators have stated that geopolitical changes must not hamper the commercial operations and decisions. Telcos further said that commercial decisions are provenance of companies, and it should not be mixed with geopolitical issues which are the territory of the government.

Shrijan loves the process of creating content in various verticals, whether it be words, sounds or videos. He's also inclined towards digital marketing and tech industry developments. The art of creation always intrigues his interest.

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