The pressure to make payments to the government of India following the order of the order by the Supreme Court of India is quite profound on telecom companies, particularly Vodafone Idea. The company has to find around Rs 53,000 crore before the last week of January 2020 to pay up the spectrum licence dues calculated on the adjusted gross revenue (AGR) figures.
The company is already running in losses and was hoping that the government could somehow come to its rescue. The government has clearly said it is helpless as far as the AGR based dues is concerned. Some relief has been announced, but those may not be of immediate help with this huge liability. Unfortunately, Vodafone Idea is not even in as strong a footing as Bharti Airtel to raise funds from the market.
As per an Economic Times report, the immediate fallout of this burden on the company is that Vodafone Idea has put on hold all its plans for expansion of its 4G services putting the company into deeper trouble in terms of the competition vis-à-vis rivals Bharti Airtel and Reliance Jio.
The ones immediately worried due to these developments at Vodafone Idea are the vendors, Nokia, Ericsson, ZTE and Huawei. They have dues to collect from the company and they are now concerned how they would be able to recover their dues.
Vodafone has however issued an official denial of any of these concerns and has said it has only put on hold some of the expansion plans aimed at the future and the current operations are being carried on including with the vendors. One of their objectives is to complete the integration of the networks of Idea and Vodafone.
Airtel has said it has not put off any of its plans for the expansion of its 4G services as well as the preliminary work related to the 5G installations.
The vendors to the telecom companies are also concerned that the year 2020-21 may be even worse that the one just going by as the companies will be trying to hold on to their current market positions.