Another call drop
1 min read . Updated: 01 Sep 2020, 10:14 PM ISTAttempts to raise tariffs could send Vodafone-Idea customers porting out in favour of rivals, unless Jio and Airtel up theirs simultaneously, which would smack of cartelization. If Vodafone-Idea folds up or sells out, the private segment of this market will turn into a duopoly
The Supreme Court on Tuesday gave telecom operators just 10 years to pay their adjusted gross revenue (AGR) dues to the government. This offers only partial relief to these firms, which wanted 15-20 years to do so. Bharti Airtel and Vodafone Idea had been reeling under a fierce tariff war unleashed by Reliance Jio when they found themselves slapped with a massive AGR bill, after the Centre’s definition of AGR was upheld by the apex court last October.
Bharti Airtel has stronger finances and might not sweat much to cough up the money. But for Vodafone-Idea, a decade seems too short a stretch. Back-of-the-envelope calculations suggest it will struggle to make its payments. Its survival has been in some doubt ever since it was hit by the AGR demand. To pull through, it may need its owners to infuse fresh capital. Attempts to raise tariffs could send its customers porting out in favour of rivals, unless Jio and Airtel up theirs simultaneously, which would smack of cartelization. If Vodafone-Idea folds up or sells out, the private segment of this market will turn into a duopoly. Averting this outcome won’t be easy. And nor will the job of our Competition Commission
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