Vodafone Idea says it’s ‘barely afloat’, appeals Supreme Court to stagger spectrum payments over 20 years
- During the AGR spectrum dues case hearing in the Supreme Court on June 18, Vodafone Idea submitted that it is ‘barely afloat’.
- The company also stated that if forced to pay, it ‘will go under’ and won’t be able to pay its 11,000 employees.
- The telco appealed the court to allow it to pay spectrum dues over the next 20 years.
- The AGR demand against Vodafone stands at ₹53,000 crore and Airtel at ₹35,586 crore.
During the adjusted gross revenue (AGR) spectrum dues case hearing in the Supreme Court today (June 18), Vodafone Idea submitted that it is ‘barely afloat’. In its appeal, the troubled telco said that it ‘will go under’ if the court forces it to pay more right now.
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Instead, the telco reiterated that it be allowed to repay spectrum dues over the next 20 years.
TOP VIDEOS FOR YOUVodafone Idea argued that it has furnished bank guarantees of ₹15,000 crore and paid ₹7,000 crore dues so far. Its spectrum dues liability as assessed by the government stands at ₹53,000 crore.
The Supreme Court bench, however, demanded that Vodafone Idea pay up ‘some’ amount. “You must deposit some money, the government needs money for public welfare during this pandemic. Your industry is the only industry that is making money during this pandemic,” Justice Shah told Vodafone Idea’s counsel Mukul Rohatgi, as quoted by Bar and Bench.
The court asked Vodafone Idea, Airtel and other telecom companies to file their books of accounts and other financial documents for the last 10 years.
During today’s hearing, Vodafone Idea’s stock fell by nearly 3% while Airtel jumped by 1%. Both the telcos together account for nearly ₹87,000 crore worth of AGR spectrum dues, out of the total ₹1.47 lakh crore demand by the government.
Earlier on June 11, the Supreme Court asked Vodafone Idea, Airtel and other telcos to provide an undertaking to pay up the spectrum dues. Immediately after the announcement, Vodafone Idea’s share nosedived by 13%.
Airtel says its payments constitute 70% of the total AGR payments so far
Arguing for Airtel, advocate Abhishek Manu Singhvi argued that it has paid up ₹18,000 crore and furnished bank guarantees worth ₹10,800 crore.
AdvertisementThe government has demanded ₹35,586 crore from Airtel, however, the telco said its liability stood at ₹21,000 crore based on its own assessment.
PSUs get a breather after government drops AGR demand against them
After being pulled up by the Supreme Court for demanding spectrum dues from public sector undertakings (PSU) like Power Grid, Oil India and GAIL, the Indian government withdrew its demand from PSUs today. Shares of the three companies surged by nearly 3% after the announcement of demand being withdrawn.
Why is the AGR judgment important for Vodafone Idea?
AdvertisementVodafone Idea is currently fighting for its survival. UK parent Vodafone Plc’s CEO Nick Read had earlier said that its Indian entity could be liquidated if the government does not provide any assistance.
According to the latest reports available, Vodafone Idea has debts of nearly ₹1.2 lakh crore, while its cash and cash equivalents were at just ₹678 crore, suggesting that the company was running on fumes.
In 2018-19, a year after Jio’s entry in the Indian telecom sector, Vodafone Idea posted losses of ₹14,056 crore. In September 2019, it posted losses of ₹50,922 crore.
AdvertisementOn the other hand, Vodafone Idea’s rival Airtel has built a war chest to pay
Vodafone Idea is also said to be in talks with Google to sell a 5% stake. While its revenue is growing, its fate is still tied to the Supreme Court’s orders.
Vodafone Idea shares plunge over 13% after Supreme Court asks for an undertaking to cough up ₹53,000 crore
A deal with Google is not the only lifeline Vodafone Idea is betting on
Vodafone Idea and its timeline of woes
Google-Vodafone Idea deal – all the banks and mutual funds that are waiting for it to happen
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