KM Birla Says, Vodafone Idea Will Shut Down In Absence Of Govt. Relief

• Vodafone Idea Limited (VIL) will have to be shut down if the government does not provide the company’s sought relief, its chairman, Kumar Mangalam Birla, said at an event in Delhi on Friday.
• . His comments follow the decision of the Supreme Court on the Adjusted Gross Revenue (AGR) of 24 October, after which the company reported a mammoth loss of Rs 50,921.9 crore in the second quarter, pulled down by provisions on AGR dues.

Vodafone Idea Limited (VIL) will have to be shut down if the government does not provide the company’s sought relief, its chairman, Kumar Mangalam Birla, said at an event in Delhi on Friday. His comments follow the decision of the Supreme Court on the Adjusted Gross Revenue (AGR) of 24 October, after which the company reported a mammoth loss of Rs 50,921.9 crore in the second quarter, pulled down by provisions on AGR dues.

“If we don’t get help, we’re going to shut down shop, it could be the end of the story for us. There’s no business in the world that could get that kind of money in three months,” Birla said.

“The room’s big elephant is AGR. What, in truth, I think is something that lies in the judiciary trial. I assume a conversation should take place between the government.

This was a lawsuit filed by the government against telecommunications service providers, “he said. AGR (adjusted gross revenue) is an amount of which telecommunications companies pay as legal duties.

The Supreme Court upheld the government’s position that non-telecom income should be included in the AGR to measure duties.

Recently, Airtel reported its highest loss of approximately 23,045 crores compared to a net profit of approximately 119 crores in the corresponding period last year, Vodafone Idea recorded a loss of approximately 50,921 crores, the highest ever loss for a company in India.

Both operators said they hoped to receive government relief on AGR payments. “After the recent Supreme Court ruling, we are in active discussions with the government seeking financial assistance,” said Ravinder Takkar, Vodafone Idea, Managing Director and Chief Executive Officer. This even happens as the Telecom Department issued notices to all operators to deposit the license fee duties in accordance with the SC decision. Total duties are estimated to exceed ~2 lakh crore for the entire industry.

Analysts monitoring the telecom sector said that if the government insists on raising duties without providing any relief, then there will be no choice but to shut down their operations. “Apart from Reliance Jio, it will be difficult for all other operators to continue operations with this form of a payout. Telecom, once the reforms poster boy, is set for a huge crash unless the government steps in, “an analyst said.