How Vodafone Idea Can Be Saved

Apart from lowering levies and taxes, the Centre should consider a relief package akin to the one offered to BSNL/MTNL

- Thomas K Thomas

In 2016, the Chief Executive Officer of an incumbent telecom company started his presentation to the board of directors with the image of a calm sea under a stormy sky. The point that the chief executive made, during that meeting held in Dubai, was that his company will remain calm as it faced the storm created by Reliance Jio’s entry as an affordable data services operator. But what had gone unnoticed and perhaps forgotten was another storm that was brewing for almost 10 years — the regulatory battle with the centre over Adjusted Gross Revenue (AGR).

Four years on, just when the incumbent players thought they had ridden over the Reliance Jio storm, they have been hit with the AGR tsunami that is now threatening to drown Vodafone Idea and Bharti Airtel. The two operators have to pay nearly ₹85,000 crore as dues and penalties by March 17 after the Supreme Court ruled that revenue share has to be paid on non-telecom revenues also.

Even though the operators had ample time to secure themselves financially, from any adverse fallout of the court verdict, Airtel seems to be more prepared to pay the dues when compared to Vodafone Idea. Airtel has to pay about ₹35,000 crore of which it has already paid ₹10,000 crore.

Airtel raised $3 billion recently and has several assets which it can sell, if required, to meet the payment demand. Both Bharti Group and SingTel, the promoters, can also pump in additional equity if required.