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Vodafone Idea may shut shop if govt does not provide relief: Kumar Mangalam Birla

Vodafone Idea’s financial position is so precarious that it will be forced to shut operations if the Centre does not offer a fiscal package for the telecom sector.

Speaking at a media event in New Delhi, Kumar Mangalam Birla, Chairman, Vodafone Idea, said: “I think we can expect much more stimulus from the government because it is required for the sector to survive. If we weren’t getting anything, then I think, it is the end of the story for Vodafone Idea.”

“It does not make sense to put good money after bad. We will shut shop,” he added. This comes after Vodafone Idea posted its biggest quarterly consolidated net loss of ₹50,921.9 crore for the second quarter ended September 30, impacted mainly by adjusted gross revenues (AGR) provisions.

Pending AGR dues

Vodafone Idea has provisioned ₹25,677.9 crore for AGR payments, which is estimated at ₹44,150 crore. This includes an estimated licence fee of ₹27,610 crore and spectrum usage charges (SUC) of ₹16,540 crore (with penalty and interest) for up to September 30.

The telecom operator has filed a review petition in the Supreme Court seeking a waiver of the interest and penalty amounts. The company and other operators recently increased tariffs by 40 per cent, which will improve their EBITDA margins. In addition, the Centre has deferred the payment of spectrum dues for two years.

Analysts said, the Centre will have to do more for the sector. “The government will have to review the entire licence fee and spectrum charge regime for reviving the telecom sector. Operators currently pay 30 per cent of their revenues as taxes and levies,” said an industry expert.

“If you don’t get the remedies being suggested, the situation is critical,” Vodafone CEO Nick Read said at a recent press round-table in London.

Source: The Hindu