New Delhi: India’s telecom industry is in a bigger crisis than ever before with Vodafone Idea Ltd sitting on the edge of bankruptcy, said Subhash Chandra Garg, former secretary at the department of economic affairs.
“While the telecom service has become almost universal in the country and the prevailing tariffs in India are possibly the lowest globally, the businesses, which deliver these services are quite broke," Garg said in his blog post ‘Rebuilding Telecom Business in India’ published on Tuesday.
The former finance ministry official's comments come at a time when India’s telecom companies are struggling to pay dues and penalties related to adjusted gross revenue (AGR), after the Supreme Court on 24 October ended a 14-year long legal battle, upholding department of telecommunications’ (DoT) definition of AGR.
According to DoT calculations, Bharti Airtel Ltd has to shell out ₹35,586 crore to the government and Vodafone Idea, which received the biggest blow from the SC verdict, has to pay ₹50,000 crore.
On Monday, Vodafone Idea paid ₹2,500 crore as part payment of its AGR dues and said it will deposit ₹1,000 crore more by Friday. Bharti Airtel has paid ₹10,000 crore to the government and said it will clear the balance before 17 March after examining dues across 22 circles.
Amid a situation of mounting debt, shrinking revenues combined with the SC judgment setback, Vodafone Idea chairman Kumar Mangalam Birla and chief executive officer Ravinder Takkar met telecom secretary Anshu Prakash on Tuesday to seek relief from any coercive action.
Telecom companies hurried to clear part of their AGR dues after the apex court last week dismissed their pleas seeking relief and rapped them and DoT officials for delaying the payments. The original deadline to pay dues amounting to ₹1 trillion crore was 23 January.
Garg, in his blog, said telecom operators should be offered a one-time settlement scheme to pay the principal amount and be given a waiver on interest and penalties related to AGR.
“Alternatively, appoint a board for Vodafone Idea by ousting current board on the lines of action taken in case of IL&FS (Infrastructure Leasing & Financial Services Ltd) and DHFL (Dewan Housing Finance Corporation Ltd) and secure a moratorium of some time on servicing of loans and government dues," Garg said.
He also suggested transferring spectrum stuck with telecom firms, which have shut shop or are undergoing insolvency process, by not levying AGR-based fees on the capital value of the spectrum.
