Chairman Kumar Mangalam Birla said that Vodafone Idea will have to be closed down if the Government doesn’t provide relief that the company has sought.
This News is Brought You By www.satiitv.com
His comments follow the Supreme Court’s order (as on 24th October) decision on the Adjusted Gross Revenue (AGR), after that this telco confirmed a loss of Rs 50,921.9 crore in the second quarter, pulled down by provisions for AGR dues.
AGR (Adjusted Gross Revenues) is a percentage of which the telecom companies pay as statutory dues. The Supreme Court had upheld the government position that non-telecom revenues have to be included in the AGR for calculating dues.
Kumar said that the Adita Birla Group will not invest any money in Vodafone Idea in the absence of relief from the government.
“We will shut shop if we don’t get relief, it could be the end of the story for us. There is no company in world that could get that kind of money in three months,” Kumar added.
“The big elephant in the room is AGR. Which is actually I think something which lies in the court of judiciary. I believe Government can have a dialogue. This was a suit filed by the government against telecom service providers,” he said.
Vodafone Idea, Bharti Airtel & Tata Teleservices earlier this month filed separate petitions in the Supreme Court, seeking a review of penalties and interest on the dues and questioning some components of the non-core items that the court said should be included while computing AGR of telcos.
Vodafone Group has already conveyed that it won’t infuse any further equity into Vodafone Idea Ltd (VIL), having written down the value of its joint venture with the Aditya Birla Group to zero after the Supreme Court ruling on adjusted gross revenue (AGR).
Vodafone Group chief executive Nick Read had also described the status of its joint venture in India as critical in the wake of a Supreme Court order. Birla’s Idea Cellular and British telecom giant Vodafone plc’s India unit had merged last year to compete with the onslaught of free voice calling and cheap data unleashed by richest Indian Mukesh Ambani’s Reliance Jio.
Birla, said that the Indian government has realised that the telecom sector is a critical sector and the whole digital india programme rests on this. “This is a strategic sector,” he said.
The government has publicly stated that it wants three players from the private sector and one player from the public sector, Birla said. “I think that we can expect much more stimulus from the government because it is required for the sector to survive. If we weren’t getting anything then I think it is end of story for Vodafone Idea.”
“Since the government has won, it gives them headroom to talk to judiciary and try to find some of solution. I don’t know which form or shape it takes,” he added.
The operator’s average revenue per user (ARPU), a key performance indicator, was ₹107 in the second quarter compared with ₹108 in the previous quarter, declining after improving over two consecutive quarters.