Press "Enter" to skip to content

Vodafone Idea to possibly Back Out of India

Vodafone Idea the big telecom company lost a 4-year legal battle in the Supreme Court in October last year which is making them stand in an inevitable position. The battle of the company was against the department of telecommunications (DoT) over the definition of adjusted gross revenue and regulatory payments which are linked to the AGR applications by telecom firms including Bharti Airtel Ltd and Tata Teleservices Ltd were rejected by the supreme court which stated to defer paying these tax levies to the government the previous month.

The government has ordered the payment of Vodafone Idea dues (estimated at ₹44,000 crore) which has to be paid in full. The government cannot go against the supreme court and it has big problems on its hands in this current situation. Vodafone Idea will have to be shut down in India if the bailout is been not done in the given time.  Vodafone Idea’s exit from the scene is expected to well cause a disturbance and crisis in India’s financial system as collapse of non-bank lender Infrastructure Leasing and Financial Services Ltd still fresh with the memories of 2018 collapse.

The collapse of Vodafone Idea will cause a huge impact on the economy of the country and the government’s own revenues which will set a precedent for future spectrum payments.

The Government has been considering all the implications and hence taking time to work out a solution for the problem. The government is  serving three compulsions on the company keeping the health of the telecom sector intact, second one being   Supreme Court compliance and third  consumer interest as sated by a top government official who requested to be anonymous. There was a call  for urgent relief from the sector, although the highest decision-making authority at DoT, the Digital Communications Commission, is still thinking and has not made any final decision as of now. It will needed to be approved by the cabinet once it is passed by the commission.

The consenes on how exactly Vodafone Idea will be saved is a big questions along with  what kind of package will the government serve up or  will the deal have implications for consumers and the competition.

Weeks before DoT asked all operators that their  self-assessment of AGR dues have to be speeded up and they also have to submit their documents which will support their calculations and decisions. Though companies like  Tata Teleservices, Bharti Airtel, and Vodafone Idea made payments for some amount, the government took this step.

The government is in the process of exploration of certain more possibilities of roping in third-party audit firms with the intention of reconciling the dues which has to be payable by the telecom operators. This happened when there were certain differences that were emerged in individual calculations made by the government and the telcos as stated by the reports.

The critics say that the telecom Giant could have handled the situation their outreach to the government a lot more sensitively as they were aggressive in stating that they wont be serving in India if they do not get a relief as reported by   Amit Pau who was a former  managing director of Vodafone, and chief operating officer at Accloud, a tech platform