industry

Voda Idea may file curative plea, apply for more time to pay AGR dues


NEW DELHI/KOLKATA: Vodafone Idea is likely to approach the Supreme Court for extension of deadline to meet its obligations on adjusted gross revenue (AGR), and may also file a curative plea after its review petition on the court’s October 24 ruling was dismissed on Thursday.

The government has estimated Vodafone Idea’s dues in the AGR matter to be more than Rs 53,000 crore, including over Rs 28,000 crore in licence fee, interest and penalties and the rest on spectrum usage charges (SUC). However, the company’s internal calculation pegs it at Rs 44,000 crore. This, after the top court’s judgment widened the definition of the revenue on which telecom companies need to pay their licence fee and spectrum usage charge to include non-core items.

“The immediate course of action for the company is to file for an extension of timeline, which is currently a week away, so that the company may find routes to raise the money and have some time to think the future course of action,” a person familiar with the company’s plan told ET.

Later in the day, Vodafone Idea said in a statement to the stock exchanges that it “is exploring further options, including filing of a curative petition”.

An email query sent to Vodafone Idea remained unanswered till as of press time.

The person cited earlier said that in case the top court rejects the company’s plea seeking an extension of deadline, Vodafone Idea might be forced into insolvency, as has been stated by the company’s chairman, Kumar Mangalam Birla, earlier.

Last month Birla had said, “If we are not getting anything, then I think it is end of story for Vodafone Idea. It does not make sense to put good money after bad… We will shut shop”.

Birla’s remark had come close on the heels of Vodafone Group CEO Nick Read’s statement in November last year that the joint venture between the Aditya Birla Group and Vodafone Plc may head for liquidation of India business if the government does not ease spectrum fees. Read had called the situation “critical, if you don’t get the remedies being suggested”.

Nitin Soni, director corporates at Fitch, said that if Vodafone Idea’s promoters don’t inject fresh equity, the company’s exit from the telecom space would be “imminent”.

Along with loss of jobs of about 10,000 employees, it could also be worrying for Indian banks to which the company has an exposure of close to Rs 30,000 crore out of the Rs 1,117,300 crore of gross debt sitting in its books.

Vodafone Idea is also in the process of selling its data centres and optic-fibre assets, besides its 11% stake in Indus Towers, to help pare debt. It had also raised Rs 25,000 crore in March 2019 via a rights issue, a part of which it can use to pay the AGR dues, as per the modified objectives of the issue.

The company which along with Bharti Airtel has been knocking at the government’s door for a relief package for the telecom sector, which has seen a degrowth in its revenue owing to the intense price war unleashed with the entry of Reliance Jio Infocomm.

Vodafone Idea last year posted India’s worst ever corporate loss of over Rs 50,000 crore in the September quarter as it set aside nearly Rs 26,000 crore toward AGR dues. It had expressed doubts about continuing as a going concern if made to pay the entire AGR due amount.

“Vodafone Idea in all meetings with us has made it very clear that it has no money to pay,” a senior telecom department official told ET.

If Vodafone Idea does not meet the January 23 payment deadline, DoT will have to send demand notices. It then has the option of invoking bank guarantees and revoking its permits as a last resort, the official said.

The final amount the company needs to pay will be calculated by the telecom department once concerned companies pay up dues after their internal assessments.

The telco had filed a review petition in the Supreme Court, hoping for a reduction in penalties and interest, which account for 75% of the dues.





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