Vodafone Idea stays in the game; comes around on AGR issue, terms it a “good outcome”

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September 7, 2020 2:56 PM

Vodafone Idea Ltd.’s top management today broke its silence on the Supreme Court’s decision to grant telecom companies 10 year to pay their adjusted gross revenue dues. The struggling telecom operator said that the outcome was “good” while it stressed on the need to raise tariffs.

The telecom company owes the regulator around Rs 50,400 crore, the most among the three private telecom companies.

Vodafone Idea Ltd.’s top management today broke its silence on the Supreme Court’s decision to grant telecom companies 10 year to pay their adjusted gross revenue dues. The struggling telecom operator said that the outcome was “good” while it stressed on the need to raise tariffs. The comments came as Vodafone Idea today announced a unified brand to mark the completion of Idea Cellular and Vodafone Plc’s integration, two year after the merger was announced. The newly carved out brand ‘Vi’, according to the company, has its eyes set on the future. Earlier, in December last year, Aditya Birla Group chairman Kumar Mangalam Birla had warned that the telco might shut shop if it gets no respite in the AGR dues case. Similar comments were also made by Vodafone’s Nick Read.

“Besides the 10 years part, which was an important element of the judgement, there is also an initial payment which was 10 per cent which we have already paid, of the amounts that have been given by the Department of Telecommunications (DoT), so in fact our first payment based on the outcome of the judgement is going to be in March 2022 of the first of the 10 year installments, which I think is eventually a good outcome,” Ravinder Takkar said. Vodafone Idea had asked for a little more time from the courts to pay their dues. However, the move brings respite for the company giving it time to raise funds in a calibrated manner to pay its dues. 

The telecom company owes the regulator around Rs 50,400 crore, the most among the three private telecom companies. To aid part of its dues, Vodafone Idea had last week informed the bourses that its board has approved a proposal to raise Rs 25,000 crore through various avenues including issue of shares and debentures. Ravinder Takkar added that the entire industry is of the view that tariffs in the Indian market are “unsustainable” and companies are selling below cost, something “evident from the Profit and Loss (P&L statements) and balance sheets of companies”.

“Consumers are ready to pay additional tariffs – which is something they were paying earlier – to keep the quality of service up. We believe tariffs have to go up at least in the short term… getting them in the first steps up to Rs 200 is an important step and eventually the Rs 300 range,” Vodafone Idea’s boss said. Currently the company earns around Rs 117 from every user, which is below Bharti Airtel and Reliance Jio. 

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