Mumbai: Vodafone Idea (Vi) said it is a “travesty of justice” and “inconceivable” that the Supreme Court (SC) has not allowed “errors” in adjusted gross revenue (AGR) calculations to be corrected, a ruling which will cost the cash-strapped telco around Rs 25,000 crore and force it to “go under”.
In its petition filed on Tuesday to review the July 23 order of the court not allowing correction of alleged errors in the telecom department’s AGR calculations, the struggling telco said it had no intentions to “wiggle out” from paying its AGR dues as mandated by the court. But if arithmetical mistakes are not allowed to be corrected, then it will have to shut shop, leaving nearly 280 million subscribers, some 20,000 direct and indirect employees, banks and retailers high and dry, with even the government getting hurt in the process.
“It is inconceivable that even errors/inadvertent additions by the respondent-DoT to the AGR dues have not been allowed to be corrected…. It is a travesty of justice that the petitioner is restrained from questioning arithmetical errors/omissions, which are going to cost the petitioner approximately Rs 25,000 crore (Rs 5,932 of principal plus interest, penalty and interest on penalty),” said the telco (read: petitioner) in its petition to the SC.
Respondent is the Department of Telecommunications (DoT).
“The impression of this… court that the petitioner is seeking to wriggle out of the orders on account of recalculation is completely misplaced, as would be evident from the error and mistakes illustrated before this… court,” Vi said. It added that it was neither the intention of DoT nor the court to see the government “unjustly benefit” from excess AGR dues.
Vi’s review petition was filed within weeks of SC rejecting its earlier appeal to look into alleged arithmetical errors made by the DoT, thus confirming the AGR dues at Rs 58,254 crore, of which it has paid Rs 7,854 crore. Vi had said there was double counting by the telecom department and some of the payments made were not included. The telco’s own calculations put the AGR dues at Rs 21,533 crore, which was disallowed by the top court.
“The petitioner is already struggling to survive and remain a third private wireless telecom operator in the country,” said the telco.
In fact, for the telco whose fortunes have tumbled since it was born out of the merger of Idea Cellular and Vodafone India in 2018, these are the final set of appeals to the SC.
“The petitioner will go under, and its approximately 27.33 (June 2021) crore subscribers will be left high and dry… will lose its investment of lakhs of crores of rupees in this business… approximately 10,000 direct, approximately 10,000 associate employees, and approximately 100,000 distributors, retailers and store staff will lose their jobs and employment,” warned Vi.
Vi said it has “outstanding utilised facilities” of approximately Rs 47,000 crore from banks, non-banking finance companies (NBFCs) and mutual funds, of which Rs 25,000 crore is from public sector banks, over and above the amount due to DoT.
Alarmed lenders have been pushing the government to take steps to save the telco. Last week, Vi’s lenders met with DoT, saying converting debt to equity in the telco was an option for them, but that the carrier hasn’t defaulted on any payments as yet. They also said that the government would stand to lose a lot more than banks, if Vodafone Idea went bust.
At March end, Vi said it owes Rs 1.57 lakh crore to the government, including Rs 96,270 crore towards spectrum payments and the rest towards adjusted gross revenue (AGR) liability.
Vi highlighted that its survival is important for DoT as well, so that the telco can continue to make “not just license fee/spectrum usage charges, but also payment of instalments for auction of spectrum”.
The telco’s survival issues came to the fore when Aditya Birla Group chairman Kumar Mangalam Birla stepped down from the telco’s board last week. The move came less than two months after he wrote to the government offering to hand over the group’s stake in Vi to any public sector or domestic financial entity who could keep the company afloat. He had also asserted that without immediate government support, the telco would be driven to an irretrievable point of collapse.
While the government is expected to roll out a relief package soon, Vi continued with its appeals.
Rival Airtel, which has also been trying to reduce its Rs 43,980 crore AGR dues, is also expected to file its review petition soon. It has so far paid over Rs 18,000 crore of its AGR dues.