The accelerated fee to Vodafone Idea (VIL), which was in any other case due in September 2020, was made beneath phrases of ‘contingent legal responsibility mechanism’.
The quantity, nevertheless, is comparatively small when seen within the context of over Rs 58,000 crore legal responsibility that the cash-strapped Vodafone-Idea Ltd faces simply on account of previous statutory dues as a fallout of a Supreme Court choice, say specialists.
“Longer term viability of VIL continues to remain under cloud,” Credit Suisse mentioned in a notice including that it believes that the “sector is likely to be heading towards a two (private) player market”.
According to Credit Suisse whereas VIL might be able to maintain over subsequent two years with the spectrum and AGR fee deferment, “VIL’s enterprise viability is beneath cloud even at Rs 200 Average Revenue Per User (and subscriber base of 280 million) as soon as the deferred spectrum fee resumes in FY23…
“The company will need strong operational improvement along with meaningful equity infusion (on which there is limited clarity) to sustain in the long term,” the notice added.
Vodafone Group on Wednesday mentioned it has “accelerated this payment to provide Vodafone Idea with liquidity to manage its operations, and to support the approximately 300 million Indian citizens who are Vodafone Idea customers as well as the thousands of Vodafone Idea employees during this phase of emergency health measures, taken as a result of the COVID-19 pandemic.”
Consequent to the choice by the Supreme Court on the definition of Adjusted Gross Revenue in October 2019, India’s telecom operators turned chargeable for licence charges, penalties and curiosity relationship again over 14 years, it additional mentioned.
“Vodafone Idea has made funds to the Government of India in relation to its AGR liabilities. Under the phrases of the CLM (contingent legal responsibility mechanism), Vodafone Group is obliged to make funds to Vodafone Idea the place quantities paid pursuant to the contingent liabilities of Vodafone India exceed these of Idea Cellular. The CLM took impact at completion of the merger of Vodafone India and Idea Cellular in August 2018,” it added.
The telecom trade is watching large AGR dues, it owes to the federal government. These dues arose after the Supreme Court, in October final 12 months, upheld the federal government’s place on together with income from non-core companies in calculating the annual AGR of telecom firms, a share of which is paid as licence and spectrum charge to the exchequer.
The Department of Telecommunications (DoT), as per its personal submission to the apex courtroom final month looking for reduction in fee tenure, had put dues of three firms — Bharti Airtel, Vodafone Idea and Tata Group — at Rs 1.19 lakh crore. Operators have to this point solely paid a part of DoT-calculated dues, citing self evaluation.
In March, following an approval by the Cabinet, an utility was moved earlier than the Supreme Court (on March 16, 2020) looking for its permission for the licensees impacted by the AGR judgement to pay the unpaid quantity of previous DoT assessed/calculated dues in annual instalments over 20 years.
if(geolocation && geolocation != 5 && (typeof skip == 'undefined' || typeof skip.fbevents == 'undefined')) !function(f,b,e,v,n,t,s) if(f.fbq)return;n=f.fbq=function()n.callMethod? n.callMethod.apply(n,arguments):n.queue.push(arguments); if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version='2.0'; n.queue=;t=b.createElement(e);t.async=!0; t.src=v;s=b.getElementsByTagName(e); s.parentNode.insertBefore(t,s)(window, document,'script', 'https://connect.facebook.net/en_US/fbevents.js'); fbq('init', '338698809636220'); fbq('track', 'PageView');