Vodafone Idea will shut shop if govt doesn't give further relief: Kumar Mangalam Birla

Birla also indicated that the Aditya Birla Group will not invest any money in the company in the absence of relief from the government.
Vodafone Idea will shut shop if govt doesn't give further relief: Kumar Mangalam Birla
Vodafone Idea will shut shop if govt doesn't give further relief: Kumar Mangalam Birla
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Vodafone Idea will have to be closed down if the government doesn't provide further relief that the company has sought, its Chairman Kumar Mangalam Birla said on Friday.

Speaking to Shereen Bhan, Managing Editor of CNBC TV18 at the Hindustan Times Leadership Summit, Birla said that the government has realised that this is a very critical sector and the digital India program rests on it and hence he expects more stimulus.

“If we weren’t getting anything, then its end of the road for Vodafone-Idea… We’d shut shop if we don’t get relief,” he added.

Aditya Birla Group holds 26% in the joint venture, while the rest is held by Vodafone Plc.

Birla added that while they wouldn’t want it to happen, he also has every reason to believe that it won’t happen since the government wouldn’t want the company to shut shop.

“There isn’t a company in the world that can pay that kind of fine in three months. It doesn’t work that way,” he added.

Birla also indicated that his group will not invest any money in the company in the absence of relief from the government.

"There is no sense that good money should follow bad money," he said, later adding that in the absence of relief, infusion of capital wouldn’t be good business.

Birla said the company will have to opt for insolvency route in the absence of relief.

Speaking about the relief that he expects, Birla said that it would be the elephant in the room – adjusted gross revenue (AGR).

“It’s something that lies in the hands of the judiciary. Since it was a suit filed by the government against telecom service providers (TSP) and since it won, I think it gives the government room to talk to the judiciary and find some solution. I don’t know what shape or form that might take,” he told Shereen Bhan.

Birla also added that there is realisation now that more players are needed in the sector, something he says that even the government has admitted.

“It’s a strategic sector and it’s not in national interest to have so many TSPs shutting down,” he said.

The Supreme Court in October ordered telecom carriers, including Bharti Airtel and Vodafone Idea, to pay the government as much as Rs 92,000 crore in dues, which includes penalties and interest.

Following this, both telcos posted massive losses having adjusted for AGR dues.

Airtel's dues are roughly Rs 21,680 crore, while Vodafone Idea will need to pay around Rs 28,300 crore. Jio's dues are just Rs 13 crore since it is a late entrant in this field.

Vodafone CEO Nick Read had also said earlier that the company’s Indian operations may be headed for liquidation unless the Indian government provides relief on mobile spectrum fees and cited “unsupportive regulation” and “excessive taxes” as reasons. He called it a very critical situation.

With PTI inputs

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