Credit Suisse has said if the government offers relief measures, the scenario will be “most beneficial” for Vodafone Idea. (Photo Credit: Twitter/@VodafoneIN)
British telecom giant Vodafone on Thursday said it will continue to stay invested in the Indian market and is seeking the government’s support to tide over the current challenging times. The clarification assumes significance as Vodafone Idea is staring at nearly Rs 40,000 crore of potential statutory dues after a Supreme Court ruling upheld the government’s way of calculating telecom revenue, on which licence fee and spectrum usage charges are computed.
“Vodafone is aware of the unfounded and baseless rumours circulating in some of the Indian media that we have decided to exit the market. We would like to categorically state that this is not true and is malicious,” Vodafone group said in a statement. Vodafone said it is actively engaging with the government and is “fully supportive of our local management as they continue to manage our joint venture in these challenging times”.
Old telecom operators which have been hit the hardest by the Supreme Court verdict are seeking relief from the government on these unpaid dues. Meanwhile, a senior government official said that Tata Sons Chairman Natarajan Chandrasekaran on Thursday met Telecom Minister Ravi Shankar Prasad in the backdrop of the apex court ruling on Adjusted Gross Revenue (AGR).
Responding to an e-mail query, a Tata Sons spokesperson said, “We do not comment on speculations.” Holding out hope for the crisis-ridden sector, the government earlier this week constituted a committee of secretaries to explore a financial bailout package for the telecom sector by lowering spectrum charges as well as ending the era of free mobile phone calls and dirt cheap data.
The committee, headed by Cabinet Secretary Rajiv Gauba, has been asked to examine “all aspects” of “financial stress” faced by service providers such as Bharti Airtel and Vodafone-Idea and suggest measures to mitigate them, sources in the Department of Telecommunications (DoT) have said.
Analysts have been red flagging the implications of the recent Supreme Court ruling on telecom revenue definition for incumbent operators, particularly Vodafone Idea. Jefferies in a report last week said the AGR ruling against telcos is a “major negative” for Vodafone Idea and “raises concerns on balance-sheet solvency” for the company.
Credit Suisse has said if the government offers relief measures in form of deferred payment of current fines, reduced licence fee, and two-year moratorium on spectrum dues, the scenario will be “most beneficial” for Vodafone Idea, although even then the company will require additional equity infusion in the long run.
Vodafone Idea on Wednesday had asserted it has not made any request for debt recast to any lender or asked for reworking of payment terms and added that it will continue to pay all its debt as and when it falls due. A Vodafone Idea spokesperson on Wednesday had said: “We have not made any request for debt recast to any lender or asked for reworking of payment terms.”
“We continue to pay all our debts as and when these fall due,” the spokesperson had added. Following the Supreme Court ruling, Vodafone Idea’s stock has taken a major beating and the company has stated that it will approach the government for relief, including a waiver of interest and penalties.
Vodafone Idea Ltd (VIL) had earlier said the apex court’s verdict on the AGR case represents a “significant event” and has financial implications, which the company is reviewing. “The judgement has financial implications, which we are reviewing. We will engage with the DoT (Department of Telecom) in order for it to consider granting relief, including a waiver of interest and penalties,” Vodafone Idea had said in a recent filing.