Vodafone Idea and Airtel Troubles Set to Increase as Government Says No to More Relief

Bharti Airtel and Vodafone Idea might not get any further relief from the government as the centre has disbanded the committee which was formed to discuss relief measures

Highlights
  • The industry has total dues of Rs 1.47 lakh crore in name of AGR
  • The telcos have to pay these dues in the next three months
  • The worst hit telcos are Bharti Airtel and Vodafone Idea

The one thing that the telecom operators desperately need right now in the industry is financial support from the government in the form of relief. The two telecom operators which are in the worst possible shape right now are Bharti Airtel and Vodafone Idea. These two telecom operators are also the ones that owe the most dues in the name of license fees and Spectrum Usage Charges (SUC) which amount to more than Rs 89,000 crore for both these companies combined. Courtesy of these dues, Vodafone Idea, has posted the biggest loss in corporate history. But, as per a new ET report, the troubles might persist for these two companies for a while now as a government official has revealed that the Committee of Secretaries (CoS) which was formed to discuss relief for the telecom operators has been disbanded. This could mean that the two-year moratorium for the payment which the telecom operators have received could be the only relief in sight for these ailing telcos.

vodafone-idea-airtel-troubles-increase

Government Disbands CoS

The government official remarked on this, “They (telcos) have been given a two-year moratorium (from spectrum payment), they’ve got relief of Rs 42,000 crore.” As per the government official, the telecom operators should not expect anything more from the government in terms of relief. On posing a question about whether or not the CoS has been disbanded, the government official replied in affirmative. The government official in question also said that another inter-ministerial panel could not be appointed to discuss the relief measures for the Rs 1.47 lakh crore AGR dues for the telcos as it is a Supreme Court defined matter. Not only telecom operators, but the government official ruled any chance of relief for the non-telecom companies as well which include names likes Power Grid, Gail and RailTel.

No Lowering of License Fees for Telcos

Previously, it was expected that as per as the part of relief which the telecom operators would receive, the government would also lower the license fees which is currently set at 8%. It was popular opinion that the 8% license fees would be brought down to 5% by the government. However, with the panel disbanded and with the government in no mood to provide any kind of relief, it is tough for the telecom operators for the next few months. These telecom companies need to pay the AGR dues in the next three months.

Vodafone Idea and Bharti Airtel together have dues which amount to Rs 89,000 crore or more and these telecom companies have filed review petition on the AGR order from the Supreme Court order to seeking a review of penalties and interest on the dues, and questioning some components of the non-core items that the court said should be included while computing AGR of telcos. If the telecom companies are asked to pay the dues like this in the next three months, this will pose a threat to their situation of continuing as going concern.

COAI Still Banking on Hopes for Relief

While this news has come from the government, COAI is still hopeful in the regards to relief for the telcos. “We hope these issues will continue to be looked at and decided upon by DoT through existing channels of decision making,” said Rajan Matthews of Cellular Operators Association of India (COAI) which represents all the private telecom operators in India. According to analysts as well, the telecom companies need more relief.

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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Bitter Truth
Bitter Truth

Even if Jio is forced by govt to increase tariffs to match Avoid cartel levels, Jio will still rule, and Avoid will be far behind, especially VodaIdea. Around 400 million people have joined Jio not just for its low tariffs but also and mainly because of its best 4G network coverage, which Avoid cartel is no match… not even half of it. The only con with Jio is its slow speed, due to huge customer base, which will be solved after the spectrum auction. Also, if Jio continues with its IUC charges, then Airtel will become No.1 once again. Won’t… Read more »

DGupta
DGupta

It looks like govt has decided (probably correctly) that no reasonable amount of govt relief is enough to save Vodafone Idea. The company is too far gone- way too much debt, and too far behind in 4G network than others. So, govt has given 42,000crore relief to the industry and called it a day.

Let Vodadone Idea die. We will still have two strong profitable players in Jio ans Airtel, and one also ran in BSNL-MTNL combo.

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Mumbai

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