Vodafone Idea, India’s third-largest mobile service supplier, will shut down if the federal government doesn’t present reduction on the legal responsibility it faces in previous statutory dues following a Supreme Court order, its billionaire chairman Kumar Mangalam Birla mentioned on Friday. “If we are not getting anything then I think it is the end of the story for Vodafone Idea,” Birla mentioned on the HT Leadership Summit when requested about the way forward for Vodafone Idea in absence of a authorities reduction on fee of Rs. 53,038 crore dues.
Birla’s Idea Cellular and British telecom large Vodafone’s India unit had merged final 12 months to compete with the onslaught of free voice calling and dust low-cost information unleashed by Mukesh Ambani’s Reliance Jio. In the method, it amassed Rs. 1.17 lakh crores debt and had simply weeks again posted company India’s greatest ever company loss after it provisioned for the legal responsibility arising from the Supreme Court upholding the federal government’s place on what base ought to statutory liabilities be calculated.
“It does not make sense to put good money after bad. That would be end of story for us. We will shut shop,” he mentioned in response when requested if Vodafone Idea will put in extra money. Market chief Bharti Airtel, Vodafone Idea and different telecom gamers should pay as a lot as Rs. 1.47 lakh crores in fee of telecom license charge and spectrum utilization cost along with curiosity and penalty for previous 14 years.
Both Airtel and Vodafone Idea have petitioned the federal government for reduction in waiver of curiosity and penalty, which can halve the dues, and likewise filed a evaluate petition within the Supreme Court. Birla was, nonetheless, hopeful of reduction from the federal government not only for the telecom sector however the business as an entire to tug out the financial system from six-year low GDP development of 4.5 p.c.
“They (the government) have realised the fact that this (telecom) is a very critical sector. The whole digital India programme rests on this. This is a strategic sector,” he mentioned. The authorities, he mentioned, has publicly said that it needs three gamers from the personal sector and one participant from the general public sector.
“I think that we can expect much more stimulus from the government because it is required for the sector to survive. If we weren’t getting anything then I think it is end of story for Vodafone Idea,” he mentioned.
The authorities had late final month deferred by two years the fee on account of telecom firms for spectrum they purchased in previous auctions. This reduction totalled Rs. 44,000 crores for the business however firms are anticipated to pay this due along with curiosity after the 2 12 months moratorium.
Asked concerning the particular reduction sought, Birla mentioned, “The big elephant in the room is AGR. Which is actually I think something which lies in the court of judiciary. I believe the government can have a dialogue. This was a suit filed by the government against telecom service providers.”
AGR refers to adjusted gross revenues, a proportion of which the telecom firms pay as statutory dues. The Supreme Court had upheld the federal government place that non-telecom revenues should be included within the AGR for calculating dues. “Since the government has won, it gives them headroom to talk to the judiciary and try to find some solution. I don’t know which form or shape it takes,” he added.