India's third largest telecom service provider, Vodafone Idea Ltd IL), is struggling with a liquidity problem of such magnitude that it is inches away from bankruptcy. The fallout from such a collapse would be widespread, which will be felt by the company’s subscribers, employees, lenders, and the telecom sector as well. Without VIL, India’s telecom market, which once boasted of over a dozen operators, would be reduced to an effective duopoly.
But the biggest loser if VIL goes bust will be the government. Because not only will it have to deal with fixing a wounded sector and assuaging the battered confidence of foreign investors, it will also bear the brunt of the financial losses arising from such a collapse.
VIL’s slide into crisis
The genesis of VIL’s current troubles may be placed quite squarely on the outcome of the over 14-year-long adjusted gross revenue (AGR) case at the Supreme Court.
The matter revolved around the definition of aGR, based on which telcos pay their statutory dues to the government. The telcos argued that aGR should not include non-telecom revenue; the department of Telecommunications (doT) disagreed.
Eventually, in October 2019, the SC delivered a verdict favouring the government and directed telcos to pay up their pending aGR dues along with interest and penalties. According to the doT’s computations, this figure came out to a whopping ₹1.52 lakh crore, and the largest burdens fell on Vodafone Idea (₹58,000 crore) and Bharti airtel (₹43,000 crore). Reliance Jio, a late entrant, got away with a liability of just ₹191 crore.
after a series of appeals and petitions, telcos managed to get an extended 10-year payment schedule comprising annual instalments from the courts, but the sC has not budged on the amount that is due.
This story is from the August 08, 2021 edition of The New Indian Express Chennai.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the August 08, 2021 edition of The New Indian Express Chennai.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
Multiply Your Wealth With Sip Top-Ups
THE benefits of a Systematic Investment Plan (SIP) in Mutual Funds are widely known by now.
What Should Stock Market Investors Do In The Election Season?
Experts say it is important to resist the fear of missing out (FOMO) and avoid making short-term investments; instead, investors should focus on the long term ARSHAD KHAN @ New Delhi THE sharp correction in India's equity market last week has left investors in a turmoil state.
2024 General Polls: Dictator Vs Deliveryman
The Modi vs Modi contest is a tussle between two versions of the PM: the maha neta who wants to control everything versus the pradhan sevak who wants to deliver development to everyone
Joju George joins Suriya- Karthik Subbaraj film
EARLIER, we reported that director-producer Karthik Subbaraj will be helming Suriya's next, tentatively titled George has joined the cast of the film.
'VAARANAM AAYIRAM INSPIRED ME TO MAKE STAR'
STORIES about the struggle of chasing a dream are perhaps more intoxicating than the ones that glorify the glitz and glamour of stardom.
CONTENT-FILLED FEAST FOR THEATRE BUFFS
A tribute to singer MS Subbulakshmi, a compelling tale of a just married woman, caught in the quagmire of her mother's deceitful mind and the new home, a tale of a school teacher fulfilling his childhood desires, and a few social plays the ten days of the 33rd annual Kodai Nataka Vizha had something for everyone.
Charred memories of conflict
I ARCHITA RAGHU D OTS, dashes, demarcations.
Patidar shows Will to keep Bengaluru alive
ABOUT a fortnight ago, when Royal Challengers Bengaluru arrived in Hyderabad to take on Sunrisers, their campaign seemed all but out.
Arsenal grind out win to go top
THE tightly-contested Premier League title will be decided on the final day of the season.
Super Kings rise above tide at Chepauk
Battling multiple issues at a time, Gaikwad-led side rallies to come up with inspired show in their last home game.