Wednesday, February 1, 2023
HomeEconomyModi govt is open to Airtel, Vodafone pleas for relief on Rs...

Modi govt is open to Airtel, Vodafone pleas for relief on Rs 92,000 crore dues

Stripping out interest from the dues or paying the amount in tranches are some ideas that the government can discuss.

Text Size:

Mumbai: India is open to hearing wireless carriers’ suggestions to help ease payment of $13 billion in overdue fees, according to a government official with knowledge of the matter.

Stripping out interest from the dues or paying the amount in tranches are some ideas that the government can discuss, the official said, asking not to be identified citing rules. An independent panel can examine such requests provided the companies commit to pay some amount immediately, the official said. The official spoke before the top court on Thursday rejected telecommunication operators’ plea to review an October verdict.

Anshu Prakash, secretary in India’s Department of Telecommunications, didn’t immediately respond to an email.

The ruling may help boost government revenues at a time when tax collections have lagged targets amid an economic slowdown. But it deals a blow to debt-saddled companies struggling to recover from a brutal tariff war after Reliance Jio Infocomm Ltd. entered the market with free calls and cheap data in 2016. Bharti Airtel Ltd. and Vodafone Idea Ltd. posted record losses in the quarter through September.

“The industry continues to face severe financial stress and the outcome could further erode the viability of the sector as a whole,” Bharti Airtel said in a statement, adding that the interest, penalty and interest on penalty form almost 75% of the dues.

Vodafone Idea pared losses to trade at 4.60 rupees a share at 11:12 a.m. in Mumbai after dropping as much as 39% earlier today. Bharti Airtel gained 3.84%. Reliance Industries Ltd., the flagship company of the group that includes the unlisted telecom unit, rose 2%.

The government would need to grant a waiver or deferment of payment to preserve the three-player market structure, said Pranav Kshatriya, an analyst at Edelweiss Financial Services in Mumbai. Without government intervention, the telecom market would turn into a duopoly, giving Bharti Airtel and Reliance Jio better pricing power, he said.

Besides the telecom carriers, Indian banks will also take a blow as they rush to clean up the worst pile of soured loans among top economies. If the government insists on extracting the dues on the current terms, it may push Vodafone’s local unit into bankruptcy and worsen the banks’ bad debt mess, the official said. Vodafone Idea has to pay $4 billion as per the court ruling. – Bloomberg

Also read: Supreme Court order hurts Vodafone Idea’s shares, could threaten its survival


Subscribe to our channels on YouTube & Telegram

Support Our Journalism

India needs fair, non-hyphenated and questioning journalism, packed with on-ground reporting. ThePrint – with exceptional reporters, columnists and editors – is doing just that.

Sustaining this needs support from wonderful readers like you.

Whether you live in India or overseas, you can take a paid subscription by clicking here.

Support Our Journalism

Most Popular