Mistakes Made By Airtel, Vodafone

The telcos should have paid the disputed sum ‘under protest’ and avoided the crippling burden of punitive levies

- D Sampath Kumar

Ever since the Supreme Court rejected, late last month, the telecom companies’ plea on licence fees and spectrum usage charges it was expected that not only would there be a heavy outgo for these companies but also there would be questions over their ability to continue to carry on business as before. Now there is complete clarity.

Both Bharti Airtel and Vodafone Idea have told the country’s stock exchanges that there exists a significant risk to their ability to carry on with their mobile telephony business.

Bharti Airtel, for instance, told the country’s stock exchanges that the verdict ‘represents a material uncertainty whereby, it may be unable to realise its assets and discharge its liabilities in the normal course of business, and accordingly may cast significant doubt on the Group’s ability to continue as a going concern company’.

Stripped of accounting jargon, the company is saying that if there is no financial relief forthcoming either from the government or from the community of investors or both, it may have to shut shop. The stock exchange filing of Vodafone Idea, makes a similar assessment.

But the companies have only themselves to blame. They had ample time to secure themselves financially, from any adverse fallout of the court verdict. After all, the dispute between the telecom companies and the government had been a long-standing one, going all the way back to nearly a decade and a half when the licence-fee regime was changed from one of fixed annual payment to one based on a percentage of annual revenues of the operators. But they chose not to do anything in the matter on the facile assumption that the court’s decision would go in their favour.