Shares of telecom major Vodafone Idea plunged on Thursday morning, after media report indicated that Aditya Birla Group will not infuse any fresh capital into the loss making joint venture.
Shares of telecom major Vodafone Idea plunged on Thursday morning, after media report indicated that Aditya Birla Group will not infuse any fresh capital into the loss making joint venture. Vodafone Idea shares dived more than 21% to hit the day’s low at Rs 2.90 on BSE. Media reports are suggesting that the Aditya Birla Group will not infuse any fresh equity in Vodafone Idea and may let it go insolvent if it doesn’t get government help. Interestingly, Vodafone Group CEO Nick Read had earlier indicated that the telecom firm’s Indian joint venture may be headed towards bankruptcy, in case the relief measures from the government doesn’t come through. “If you’re not a going concern, you’re moving into a liquidation scenario—can’t get any clearer than that,” he told the reporters. However, he apologised for his remarks and said that his comments were distorted by the media.
“The coverage in India has been distorted and I apologise for the impression that the coverage conveys. It doesn’t accurately represent my comments,” Read said in a letter to the Prime Minister, telecom minister Ravi Shankar Prasad and senior government officials. Vodafone Idea’s Q2 results are awaited today too. The firm had reported a loss of Rs 4,908 crore in the first quarter. Revenue for the quarter ended June were down 4.3% to Rs 11,269.9 crore.
Meanwhile, the DoT has ordered the telcos to pay dues within the next 3 months. Bharti Airtel share price plunged more than 3.5% to hit the day’s low at Rs 354.55 on BSE. The department of teleco-mmunications (DoT) has sent out notices to all the telecom operators and internet service providers to pay their licence fee and spectrum usage charge dues to the government as per the definition of what constitutes adjusted gross revenue given by the Supreme Court in its order dated October 24.
“It is submitted that the Supreme Court while delivering the judgment dated 24.10.2019 also ordered as follows: We give three months’ time to deposit the amount, which is due and compliance be reported,”, DoT’s said in a letter. Therefore, these telecom players have time till January 25, 2020 to pay their dues which totals to around Rs. 1.3 lakh crore. If the dues of the standalone Internet service providers are included, the total amount could go up to Rs. 3 lakh crore, Financial Express reported.
Earlier on October 30th, Bharti Airtel had deferred the release of its September quarter results to November 14 as it had sought clarity and support from the government on Rs 42,000-crore statutory dues it owes the exchequer following the Supreme Court judgment. “The company is approaching the department of telecommunications (DoT) to seek clarity on the total amounts involved and request for their support to deal with this adverse outcome,” it said in a statement to exchanges. Notably, Airtel’s Q2 results will assume focus after it posted first consolidated loss in 14 years in the Apr-June period. It posted a loss of Rs 2,866 crore for the first quarter of FY20. The telecom major had registered a consolidated profit of Rs 97.30 crore in the corresponding quarter of last year.