Kumar Mangalam Birla of Vodafone Idea Expresses Concerns on High Spectrum Payment to Government

Kumar Mangalam Birla, Chairman of Vodafone Idea Ltd, has flagged concerns about a severe liquidity crunch in the telecom sector and high spectrum payments at a recent meeting with Telecom Minister Manoj Sinha, an official said. Telecom sector has been battered by falling tariffs, eroding profitability, and mounting debt, in the face of stiff competition triggered by disruptive offerings of Reliance Jio, owned by richest Indian Mukesh Ambani. Birla, who heads Vodafone Idea — the country’s largest mobile operator, raised the issues during a meeting with Sinha, which was also attended by Telecom Secretary Aruna Sundararajan.

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A senior telecom Ministry official who did not wish to be named said that the meeting took place recently where Birla talked about the severe liquidity crunch in the market, and underscored the need for relief. The talks were informal and the Department of Telecom will take a view on the issue once a formal representation is made, the official told PTI.

Vodafone Idea Ltd declined to comment on an e-mail query sent to the company on the issue. The Vodafone Idea Chief is said to have expressed concern over Rs 30,000 crore that is locked up on account of GST payment under ‘reverse charge mechanism’.

Under the GST ‘reverse charge mechanism’ provision, registered dealers are required to make tax payments in case he procures goods from unregistered businesses.

The provision was applicable from July 1, 2017, until October 12, 2017. With companies facing trouble in implementing the provision, the GST Council has decided to keep RCM in abeyance till September 30, 2019.

Amongst other concerns highlighted by Birla was the high upfront payment for radio waves, the official said adding he has sought that period of payment for spectrum purchases be increased to 18 years from the current 16 years, and favoured a moratorium. High levies in the telecom sector and the recent hike in import duty also figured in the talks, said the official but did not elaborate.

A bruising tariff war sparked by the entry of Reliance Jio into the telecom sector with free voice calls and SMS, bundled with cheap data has led to pressure on margins of incumbents which have scrambled to match competition.

Earlier this month, at its maiden earnings announcement as a joint entity, Vodafone Idea Ltd reported a consolidated loss of Rs 4,973 crore for the September quarter and announced a fund infusion of Rs 25,000 crore to help it take on the brutal competition.

Bharti Airtel too has reported a drop in consolidated net profit for the 10th straight quarter as losses on mainstay India business widened due to pricing pressure from aggressive competition. Overall, its consolidated net profit of Rs 118.8 crore in July-September represented a drop of about 65% from Rs 343 crore in the year-ago period.

Airtel’s loss from India operations (before exceptional items) mounted to Rs 1646.4 crore in the second quarter of the current fiscal compared to about Rs 940 crore in the preceding three-month period. In fact, Moody’s Investors Service recently placed Bharti Airtel’s rating on review for downgrade, following low levels of profitability and expectation of weak cash flow.

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33 Comments on "Kumar Mangalam Birla of Vodafone Idea Expresses Concerns on High Spectrum Payment to Government"

 

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Shashank Blore
November 21, 2018 11:09 pm 11:09 PM

Jio shd definitely improve in Blore
Main areas jio has lesser towers
Ashoka pillar Wilson Garden sanjay Nagar etc etc…. Indoor coverage is really weak even with 850mhz band

If jio really improves in urban areas then there won’t any reason to use avoid

Thamilan daa
November 21, 2018 7:27 pm 7:27 PM

As if AVoid will give 2 GB per day + UL calls and SMS for 180 days at Rs.509 if the spectrum price is reduced !!!.

Nikhil Mumbai-Pune
November 21, 2018 8:06 pm 8:06 PM

Airtel can give this pack and gain lot of customers from Jio. Competition will remain between these two only as Airtel is quiet good in expanding network and providing good speeds wherever there is network.

Vodafone-Idea should not give such plans before expanding network.

AU(Airtel User)
November 22, 2018 1:04 am 1:04 AM

VIL hv no money to expand network soon they will b sold.

Thamilan daa
November 21, 2018 9:05 pm 9:05 PM

Download speed in Airtel 4G at 900 MHz at sector 1A CBD Belapur Navi Mumbai on June 2018 last week was less than Tamilnadu BSNL 3G !!!. Coverage was good. But my phone kept switching between two or three airtel 4G frequencies (900, 1800 and 2300 MHz)

Thamilan daa
November 21, 2018 9:03 pm 9:03 PM

Airtel will not give. Read properly.

SonuSB
November 21, 2018 8:57 pm 8:57 PM

I remembered very well. You were the only one who always told in every comment to stay away from Airtel for at least couple of years. Now suddenly you become fan of Airtel as Airtel is doing really great to compete with Jio. I really enjoyed your comments by remembering this old stuff.

Thamilan daa
November 22, 2018 9:08 am 9:08 AM

Can you prove that Aircel was a flop at Tamilnadu and Chennai circles?.

Thamilan daa
November 22, 2018 9:07 am 9:07 AM

Stop posting foolish. The fate of India is AVoId, BSNL or jio.

Nikhil Mumbai-Pune
November 22, 2018 8:15 am 8:15 AM
Airtel is the only one who is improving their network. In Mumbai/Pune, Airtel has improved wherever there is 4G coverage since start of the year. Yet there is no sign of band 8 for LTE. But still network is good in outdoor conditions. If you have high end phone,network just shines. Jio is good for voice only since last few months. Nothing works in Mumbai at any point of time in day. Jio works between 12AM-5AM(since last five momths). Due to merger and some internal fights,Idea-Vodafone has stopped doing anything substantial in network expansion. Just retention offers won’t help them.… Read more »
DGupta
November 21, 2018 6:58 pm 6:58 PM
Vodafone Idea first need to invest their own money into the company. One big reason for this sitation is that they have funded the company with excessive amounts of debt, and not enough owner’s equity. The high debt eats into income in the form of interestevery quarter. Govt must insist that before any govt relief is considered, owners show commitment to the business by at least matching the borrowed money. In other words, a debt:equity ratio of 1:1. Tatas showed honesty and paid the Tata Tele losses out of group’s own income, paid back the bankers in full and also… Read more »
AU(Airtel User)
November 22, 2018 1:08 am 1:08 AM

+1 Dgupta
VIL will b sold before 2020 to either airtel or jio.

Nikhil Mumbai-Pune
November 21, 2018 8:12 pm 8:12 PM
But again till what time Jio should keep running business in rock bottom prices? Don’t you think it will bring monopoly in sector? Though Airtel is expanding the network,their situation is not that good too. They are just few crises behind in debt. Jio has crushed totally this sector. Prices should increase immediately and spectrum auctions should happen immediately before March 2020 which will help Airtel and Jio(there should not be auction for 5G spectrum). Prices should be as low as possible so that all spectrum should go into operators hands and by 2020 March nation will become 4G only.… Read more »
tri_vis
November 22, 2018 12:44 am 12:44 AM

Around March 2020, we will see price of Rs. 303 per month for daily plans,as originally launched and later revised by JIO.

So be prepared and save this comment

Nikhil Mumbai-Pune
November 22, 2018 8:15 am 8:15 AM

I don’t see that happening. Let’s see.

tri_vis
November 22, 2018 2:18 pm 2:18 PM

If not , we as customers will be very happy, as we are getting same benefits at approximately half price now.

But who knows what will happen in future.

Nikhil Mumbai-Pune
November 22, 2018 2:56 pm 2:56 PM

We are heading towards monopoly if Vodafone-Idea doesn’t improve their network.

Nikhil Mumbai-Pune
November 22, 2018 2:55 pm 2:55 PM

We might get less data for 303 is what I wanted to say.

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