The govt is yet to decide whether to encash bank guarantees or offer some form of relief
Confusion prevails within the ranks of government over the next steps to be taken on the matter of adjusted gross revenue (AGR) dues of the industry, with no clear line emerging whether to encash the bank guarantee of the telecom operators who have not paid up fully despite the Supreme Court’s order and the notices sent by the department of telecommunications (DoT).
The biggest predicament in the DoT is over the steps to be taken with regard to Vodafone Idea, which needs to pay the maximum – Rs 53,039 crore – but has so far paid only Rs 2,500 crore.
On Tuesday, Vodafone Idea chairman Kumar Mangalam Birla met DoT secretary Anshu Prakash to explore the options to keep the company afloat. After the meeting, Birla said he “cannot say anything at the moment”.
Birla, who met the DoT secretary for over an hour, was accompanied by Ravinder Takkar, MD & CEO of Vodafone Idea.
He refused to respond to queries on whether or not Vodafone Idea would default on payment of AGR dues or if the company could head towards insolvency.
Apart from paying Rs 2,500 crore on Monday, the company has said that it would pay another Rs 1,000 crore before the end of the week. It has again reiterated that its viability depends upon relief on the AGR matter.
Sources said that the officials in the DoT are in a fix over the next course of action because they do not want to be caught on the wrong foot this time. On January 23, the DoT had issued orders to its field offices not to take any coercive action against the operators which enraged the SC, prompting the top court to issue contempt notices against the official.
The DoT and its officials do not want to do anything which irks the SC at the next hearing on March 17. If they encash the bank guarantee of Vodafone Idea, it would mean closure of the company and the government losing over Rs 2 lakh crore by way of other dues like deferred spectrum installments and the banks will take a hit of around Rs 50,000 crore.
The other problem is that if bank guarantees have to be encashed, whether it should be done only for Vodafone Idea or even Bharti Airtel. Though Bharti Airtel on Monday paid Rs 10,000 crore of its total Rs 35,584 crore dues, and said that it will pay the balance after reassessment before March 17, technically it has not paid the full amount. So, any encashment of bank guarantee should apply to it as well.
Sources said that one line of thought in the DoT is to send notices to the company why action – cancellation of licences, levy of penalty, or encashment of bank guarantee – should not be taken against them. As per rules, any such notice needs to be followed by a 60-day period during which the companies need to respond. This way the DoT would be in compliance of the SC order and companies would get time to make the payments.
Meanwhile, there’s also the possibility of disputes between the operators and DoT over the amount to be paid, with the former coming up with a lower amount. What happens if they pay the self-assessed amount and claim that full payment has been made by them? Sources said in that case it can be interpreted by both parties that they are in compliance with the SC order and the disputed amount will figure as a separate matter.