Vodafone Idea faces certain death after SC rejects AGR plea

The Supreme Court rejected a plea by mobile carriers seeking more time to settle crore of rupees in revenue share to the government, pushing the loss-hit Indian arm of British telecom major Vodafone Group Plc, further into the deep.

A three-judge bench of the Supreme Court, headed by Justice Arun Mishra said that operators, including Vodafone Idea Ltd and Bharti Airtel Ltd, owing a total of Rs92,000 crore in dues for spectrum and licences and revenue share, must deposit the dues by 17 March. 

In fact, the apex court asked the telcos whether the court should initiate contempt proceedings against them for failing to comply with its earlier order.

Vodafone Idea now is left with few options as it struggles to stem record losses and rein in net debt.

Voda Idea owes over Rs50,000 crore to DoT, while Bharti Airtel has to pay over Rs35,500 crore. Tata Teleservices, which sold its mobile services business to Airtel, has dues of nearly Rs14,000 crore. Reliance Jio Infocomm, the least affected by the AGR dispute, paid up its Rs800 crore dues.

In its October last year, the Supreme Court upheld the way the government calculated fees payable by the telcos using a formula, which the telecom companies dispute. In January, the SC rejected their petition to reconsider the order. On Friday, the court also initiated contempt proceedings against the firms for failing to comply with its order to pay the dues by 24 January.

The setback now leaves Vodafone Idea, which is struggles to stem record losses and rein in net debt that has ballooned to $14 billion, with no options. 

Chairman Kumar Mangalam Birla had in December said the firm may be headed toward insolvency in the absence of any relief.

Vodafone has already resigned to fate and has signaled it won’t plow any more money into the venture in which it holds 45 per cent. It is for the Indian partner to chart a future course for the teetering operator. “It doesn’t make sense to put good money after bad,” Birla had also said.

It was the entry of billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd in 2016 that pushed others to the edge. Jio’s free calls and cheap data forced many to pack up while two were left bankrupt and prompted some like Vodafone’s India unit and Idea to merge.

Where more than a dozen operators jostled for a slice of the world’s second-biggest market by subscribers, only two non-state carriers — Bharti Airtel and Vodafone Idea — survived the war, while Jio came out on top.