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Wednesday 29 January 2020

Telecom companies may get relief in payment of arrears

Vodafone-Idea and Airtel, which have more than 70 crore subscribers, have reported huge losses in the quarter ending September

The government may provide a big relief to the telecom sector that is going through a critical phase. It is likely to be exempted from paying the outstanding dues of companies. The Finance Ministry said on Friday that the government was considering financial relief on the payment of dues to Vodafone Idea Limited and Bharti Airtel. The total outstanding on Airtel and Voda Idea is more than Rs 92,000 crore.

The Supreme Court had recently ordered the payment of these dues along with interest, after which the two companies appealed to the government for relief. The Finance Ministry has indicated that this relief may be related to payment waiver or changes in its methods.

Further, Union Finance Minister Nirmala Sitharaman said at a press meet in New Delhi, “We want no company to shut their operations. We want everyone to flourish,” answering questions on Vodafone-Idea and Bharti Airtel reporting big losses in the September quarter due to statutory dues arising from a recent Supreme Court ruling.

However, the government has not yet taken a final decision on this. The two companies showed huge losses in the quarterly results released on Thursday. While Vodafone-Idea has incurred a loss of Rs 51,000 crore, Airtel has suffered a loss of Rs 23,000 crore.

The companies have been facing problems ever since the Supreme Court order on recently adjusted gross revenue (AGR). This has resulted in the companies having the largest quarterly loss in corporate history in the second quarter. The companies incurred a total loss of Rs 74,000 crore.

Vodafone-Idea has 37.5 crore subscribers as per the data released on 19 October by the Telecom Regulatory Authority of India (TRAI). Airtel has 32.79 crore subscribers. Reliance Jio has 348 million subscribers.

According to the data, Vodafone-Idea and Airtel jointly have more than 700 million subscribers. Private telecom companies hold 89.78% shares while BSNL and MTNL hold only 10.22%.

In the same week, the Aditya Birla Group said that it would not invest more in the company if the government did not give a major relief to its liability of more than Rs 39,000 crore on AGR. In such a situation, Vodafone-Idea will go bankrupt.

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