Another Rs 28,303 crore is at risk if Vodafone Idea folds up, and the balance Rs 32,655 crore is from companies like RCom and Aircel that are already in the insolvency courts.
It is not clear whether Vodafone global CEO Nick Read dialling back his comments a day after he made them is related to some government assurance on Vodafone Idea’s liabilities, but if any relief is being planned, this is because over Rs 2 lakh crore of dues to government over the next decade are at risk; most of this comprises Vodafone Idea’s liabilities. Put another way, if the government doesn’t provide any relief on payments that resulted from the Supreme Court’s Rs 1.3 lakh crore AGR verdict, it will end up being one of the biggest losers; the AGR problem, it is important to keep in mind, would have been contained but for government inaction over the past decade (bit.ly/2pmMuNN). The loss to the government could even be more if you take into account the fact that both industry revenues, as well as demand for spectrum, will be a lot more muted than they were some years ago when the industry was in better health. Government revenues from the sector fell from Rs 70,241 crore in FY17 to Rs 39,345 crore in FY19; the biggest fall in revenues took place because of the fact that there were no new auctions in 2017, 2018, or 2019 as the industry was cash-strapped.
Of the AGR burden, Rs 92,641 crore is on account of licence fees, and Rs 41,000 crore due to SUC charges. Of the licence fee charges, Rs 31,683 crore is due from Bharti Airtel, RJio, and Tata Teleservices, so the government will probably get it back. Another Rs 28,303 crore is at risk if Vodafone Idea folds up, and the balance Rs 32,655 crore is from companies like RCom and Aircel that are already in the insolvency courts. A detailed company-wise break-up of the SUC is not available, but since Rs 11,635 crore is due from Airtel, the government will certainly get this; Vodafone Idea owes Rs 16,500 crore on this account.
Another Rs 250,000 crore or thereabouts is due to the government till 2031 as deferred spectrum costs; of this, around 45% is due from Airtel, RJio, and Tata, and so, is safe. Most of the balance— Rs 126,669 crore—is due from Vodafone Idea, and is at risk if the telco folds up, as it will if all the AGR dues have to be paid within three months since it doesn’t have the necessary cash balances. The government will get back its spectrum if Vodafone Idea folds up, but with the sector in deep trouble, it is unlikely it will be able to get the same price when it resells the spectrum. The government will have to go to the insolvency courts to get the AGR dues—around Rs 61,000 crore for Vodafone Idea and others—where there could be a 30-40% haircut at the very least and, since it is not a financial creditor, it may end up getting only a small part of even this as its dues. Ideally then, the government should act like a prudent banker, and restructure the dues by reducing the penalty/interest, and giving the telcos more time to make the payment because the losses due to not doing this will be very high.