Vodafone Idea Might Shut Down Operations If Govt Does Not Provide Relief in AGR Matter

Published by
Arpit Sharma

The telecom industry has been undergoing a lot of financial pressure since October. The things have gone downhills for the incumbent telecom operators, Bharti Airtel and Vodafone Idea ever since the Supreme Court announced its verdict on the Adjusted Gross Revenue (AGR) definition, thus putting a massive burden of Rs 90,000 crore worth of dues on both of these companies. However, the worst-hit among the two is Vodafone Idea which is currently India’s third-largest telecom operator. A few words have come from the chairman of the company Kumar Mangalam Birla who has said that Vodafone Idea will shut shop if there is no relief from the government. It is worth noting that the telcos under pressure have been asking for

government relief on the dues. Until now, these telcos have been given a two-year payment moratorium on the payment deadlines, but apart from this single relief, there is nothing more to the rescue of these telecom companies. The billionaire chairman of the company spoke at HT Leadership Summit when asked about Vodafone Idea, “If we are not getting anything, then I think it is the end of the story for Vodafone Idea.”

Vodafone Idea Could Shut Down in Absence of Relief: Chairman

After the data tariff war bruised the telecom industry and Vodafone India and Idea Cellular found themselves unable to compete with the Mukesh Ambani led telecom operator, Reliance Jio, given its dirt-cheap data rates, the two companies decided to merge their operations. In the process, the merged entity was rendered in a debt of Rs 1.17 lakh crore which still remains on the head of Vodafone Idea. After this blow, the telecom company received another blow in the form of AGR decision which put a further financial pressure of Rs 40,000 crore or more on the company, accounting which, the telecom operator posted the most massive loss in the Indian corporate history.

When asked about whether or not Vodafone Idea would pour more money into the business, Kumar Mangalam Birla said, “It does not make sense to put good money after bad. That would be end of story for us. We will shut shop.” Not only Vodafone Idea, but other telecom companies including Bharti Airtel also has to pay combined dues of Rs 1.47 lakh crore for spectrum usage fees, license fees, interests, penalties and interests on penalties for the last 14 years.

Telcos Ask for Relief from Government

In their quest for relief from the government, both Bharti Airtel and Vodafone Idea have filed a review petition in the Supreme Court to ask the bench to reconsider the quantum of dues which the companies have to pay. If the interests and penalties for the telcos are waived, then the total dues would be cut down by half as most of the chunk of these dues are made up by the interests and penalties only.

Telecom Sector Important for the Country

With this Kumar Mangalam Birla also added that the government realises that the persistence of the telecom sector is imperative for India because it drives the GDP as well and it also supports the Digital India programme. He also added that the government wants three private players in the industry and one public player. But, with this, he also added that if no relief is found from the government, then it would be the end of the story for Vodafone Idea. It is worth noting that the increase in the calculation of the AGR given that now it includes non-core services too means that the telcos will have to pay higher license fees and Spectrum Usage Charge.

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.

Share
Published by
Arpit Sharma

Recent Posts

Vodafone Idea May Get Cash-Flow Relief of Up to Rs 60,000 Crore

Cash-strapped Vodafone Idea (Vi) may get a cash-flow relief of up to Rs 60,000 crore…

Airtel Black Most Affordable Plan You Should Know About

A few months back, Bharti Airtel introduced India with a new bundled service called ‘Airtel…

TRAI Warns TV Broadcasters, Won’t Shy Away from Taking Action

The Telecom Regulatory Authority of India (TRAI) has warned the broadcasters saying that it will…

Reliance Jio ARPU Up by 3.7% to Rs 143.6 in Q2 FY22

Reliance Jio’s average revenue per user (ARPU) has gone up to Rs 143.6 in the…

Connect Broadband Offers Multiple Excellent 60 Mbps Broadband Plans

Connect Broadband, which is one of the reliable broadband service providers in the country, is…

Apple iPhone SE 3 Could Resemble iPhone XR

Back in September, Apple took the wraps off as many as four new iPhones in…

COAI Says Amendments in Indian Telegraph RoW Rules to Help With 5G

The laying of fiber is going to be one of the biggest challenges for telecom…

Vodafone Idea Has More than Half of Its Subscribers in Rural India

Vodafone Idea (Vi) has more than 50% or half of its subscriber base living in…

MacBook Air 2022 Might Not be Much Different from New MacBook Pro

MacBook Air 2022 might not be much different from the new MacBook Pro models launched…