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Voda Idea: As threat of closure looms, Kumar Mangalam Birla meets DoT secy
Posted on 18th February 2020
Vodafone Idea Chairman Kumar Mangalam Birla, MD and CEO Ravinder Takkar on Tuesday called on Telecom Secretary Anshu Prakash amid concerns of its very survival if the government invokes bank guarantee over no payment of adjusted gross revenue (AGR).

The company on Monday paid Rs 2,500 crore on account of its AGR dues and said that another Rs 1,000 crore will be paid by Friday. It is said that funds are being arranged to pay the remaining amount.

Department of Telecommunications (DoT) has sought legal opinion including that of Solicitor General Tushar Mehta on whether to invoke bank guarantees of companies in case they fail to pay their full AGR dues before the next date of hearing on March 17. Any move to encash the bank guarantee would put the operation of highly-stressed Vodafone Idea at risk. The firm has maintained that without relief on the AGR payout, it may not be possible to continue as a going concern. Also, according to a CNBC-TV18 report, Voda Idea has written to the DoT and the Income Tax Department, seeking adjustment of its AGR dues against a Rs 7,000-crore pending tax refund-related to an earlier SC judgment that Vodafone-Hutchison deal was not taxable in India.

The unified licence agreement states that the licensor or DoT can encash bank guarantees and convert them into cash security if the service provider violates any term of the licence.

Bank guarantees of 16 telcos listed in the SC order of October 24 work out to Rs 37,641 crore. Many of these companies have either shut shop, sold their business or are in the bankruptcy court.

Bharti Airtel and Vodafone Idea on Monday paid Rs 10,000 crore and Rs 2,500 crore, respectively, to the Union government as a portion of their AGR dues. While Bharti has said it would make the remaining payment before March 17, Vodafone Idea has told the authorities it would pay a second tranche of Rs 1,000 crore by February 21. In all, Bharti owes the government Rs 35,500 crore and Vodafone Idea around Rs 54,000 crore in AGR dues.

Tata Teleservices, which had sold its mobile business to Airtel, made a payment of Rs 2,197 crore to the government against estimated dues of around Rs 14,000 crore. However, sources close to the company said Tatas had made the full and final payment. Reliance Jio had already paid Rs 195 crore towards AGR dues.

With that, the government has so far got Rs 14,892 crore in AGR dues from telecom companies, making up for just 10 per cent of the total outstanding amount.

Vodafone Idea, in a letter dated February 15 had informed the DoT that it had initiated the process of mobilising cash from all possible sources of the company, hoping to make the payment within days.

On February 14, SC had rejected the modification applications of Bharti and Vodafone Idea seeking relaxed payment scheme for the AGR dues. The top court directed the companies to make payments immediately, prompting the DoT to issue letters to telcos last Friday that payments must be made by the same midnight.

Coming down heavily on the industry and the government, the court said the companies had violated the order and the case projected a very “disturbing scenario”.

“It appears the way in which things are happening that they have scant respect to the directions issued by this court,” SC said in its order. Soon after, the Union government issued fresh letters seeking full payment of dues from the companies.

Finance Minister Nirmala Sitharaman, in a post-budget interaction with stakeholders, said her ministry had been actively engaging with telecom companies. The Reserve Bank of India was also monitoring the situation.

SC, on October 24, 2019, ruled that AGR for telcos should include all revenue accrued to carriers, including that from non-core activities, backing the DoT's stance in a dispute running over 16 years.
Related Companies: IDEA Cellular Limited   

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