Kolkata/Mumbai: Vodafone Idea (Vi) will file a curative petition if the Supreme Court rejects its review plea seeking correction of what it calls errors in the telecom department’s calculation of statutory payment arrears, managing director Ravinder Takkar said on Monday.
The court on July 23 ordered Vi to pay the adjusted gross revenue (AGR)-based dues as demanded by the Department of Telecommunications, rejecting the telecom operator’s contention that the calculation to arrive at the figure of Rs 58,254 crore was erroneous.
Last week, loss-making Vi filed a petition seeking review of the order, saying it was “inconceivable” that even errors or inadvertent additions by DoT had not been allowed to be corrected.
“If our review petition is rejected by the Supreme Court, we do have the ability to file a curative petition, and we certainly intend to do so, although we hope it doesn’t come to that,” Takkar said during Vi’s first quarter earnings call.
Takkar is hopeful that when the review petition comes up for hearing, the telco would be able to explain that it was never its intent to reopen or challenge the top court’s judgement, but that it was merely seeking permission to allow the government to fix errors in calculations.
Review and curative petitions, though, rarely succeed. Curative petition is the last resort for grievance redressal, where the petitioner can highlight what he believes is patent injustice.
While the government has the powers to decide how to run the sector and help telcos generate fair returns on investment, it would definitely help if the apex court allowed DoT to fix the “errors” in its calculations of AGR, Takkar said.
High debt burden
Vi and rival Bharti Airtel have been trying to get their AGR dues reduced through legal means. Of the Rs 58,254 crore sought from Vi, the telco has paid Rs 7,854 crore. Its AGR liabilities, including interest, are now at around Rs 62,180 crore based on the department’s calculations, the company has said. It said it needed to start paying AGR instalments — around Rs 9,000 crore each — from next March.
Analysts say it would be tough for the company, which had cash and cash equivalents of just Rs 920 crore at the end of June.
Vi is looking at a combination of fresh funding and bond refinancing to meet redemption of non-convertible debentures worth Rs 6,000 crore coming up from December, chief financial officer Akshaya Moodra said on the call.
The company received Rs 1,000 crore by way of tax refunds from the government in the June quarter, and expects to get a significant portion of the remaining Rs 5,800 crore this fiscal year, he said.
Vi shares closed 5.54% lower at Rs 5.97 on the BSE Monday.
Analysts see high risk
Analysts said Vi’s weak June quarter results underlined the risk of a default amid its deteriorating cash flow situation, and warned that unless the government stepped in, India may well be reduced to a two-private player telecom market.
“Vi’s June quarter cash Ebitda at Rs 1,380 crore shows fast deteriorating cash flow, while liabilities are rising … we see high risk and huge concern for Vi, and in the wake of growing uncertainties, we believe the existing operation is unlikely to meet upcoming pay-outs, and the risk of default cannot be ruled out as the much anticipated tariff hike/s and capital infusion have been insufficient,” ICICI Securities said in a note.
Vi’s managing director reiterated that the company “remained in active discussions with potential investors” to close its targeted funding quickly. The company has been trying to raise Rs 25,000 crore for the past 11 months.
Goldman Sachs estimates that Vi could face a Rs 23,800 crore cash shortfall until April 2022 based on its current operating performance.
Vi also needs funding to boost its paltry network capital expenditure that is hurting the quality of its 4G coverage and causing heavy customer losses, analysts said.
The telco lost more than 12 million customers in the June quarter to its stronger rivals, Reliance Jio and Bharti Airtel. As a result, Goldman Sachs said Vi lost another 1.3 percentage point of revenue market share in the June quarter, with a 4.5-percentage-point decline in revenue share over the last 12 months. The brokerage pegs Vi’s June quarter revenue market share at 20.5%.