The verdict by Supreme Court in the AGR dues case has left Vodafone Idea in distress. As the telco giant was hoping to get some relief in the massive AGR dues, the bench rejected the plea of both Vodafone Idea and Bharti Airtel that pointed towards arithmetic errors in the calculation of their AGR dues. The Supreme Court direct the telcos to pay their AGR dues to the government. If the government does not roll out a relief package for the financially distressed telco, Vodafone Idea might soon file for bankruptcy.
Vodafone Idea Cannot Introduce Tariff Hikes
One of the ways through which the telco giant would have lowered the financial distress was tariff hikes. However, the fiercely competitive market of India makes it impossible to introduce tariff hikes. As reported by ET Telecom, Vodafone Idea might go down on its knees and file for bankruptcy without a relief package from the government. Mayuresh Joshi, who is the head of equity research at the Indian unit of US equity research firm William O’ Neil & Co, stated that the survival options of Vi seem to be fading after the verdict of the Supreme Court has been released in the AGR case.
Vodafone Idea has a Debt of Rs 1.8 Lakh Crore
A top analyst of a renowned global brokerage firm marked that Vodafone Idea might soon file for bankruptcy as its legal options for further recourse on the AGR dues. It is also expected that the funding plans of the telco giant might suffer after the recent verdict. Without the funding, Vodafone Idea might not be able to clear its immediate Rs 24,000 crore payment towards AGR dues. In case if the funding goes down in vain, the Indian telecom market might transition into a Duopoly with Reliance Jio and Bharti Airtel as the top telcos.
In case you are not aware, Vodafone Idea has been hunting down to raise Rs 25,000 crore for the last 10 months. The telco sits on a debt of Rs 1.8 lakh crore with a cash balance of just Rs 350 crore. To date, Vodafone Idea has just paid Rs 7,854 crore and needs to clear the remaining AGR dues in 10 annual instalments.