The Supreme Court's thundering order asking telecom operators to clear their AGR dues has most affected Vodafone Idea Ltd, a joint venture between Vodafone Group Plc and India's Idea Cellular. It has to pay the biggest share of dues among all three telecom companies asked to pay a total amount of Rs 1.47 lakh crore to the government.
The mobile carrier's total liability is estimated to be around Rs 53,038 crore including Rs 24,729 crore in spectrum dues and Rs 28,309 crore in licence fees.
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As on December 31, 2019, Vodafone Idea's gross debt, excluding lease liabilities, was Rs 1,15,850 crore including deferred spectrum payment obligations of Rs 88,530 crore due to the government, besides AGR dues.
However, a couple of days ago the telecom company said it is "assessing" the amount that can be paid towards AGR dues, but hinted that its business would continue only if the timeline for cleraing dues can be extended.
The company clearly mentioned that the continuation of its business in India will depend on "favourable order" on its modification plea filed before the apex court. The company in the stock exchange filing said, "As disclosed in the company's financial statements for the quarter ending December 31, 2019, the company's ability to continue as a going the concern is essentially dependent on a positive outcome of the application for modification of the Supplementary Order."
Although on Monday, the company has made a payment of Rs 2,500 crore towards AGR dues and promised to pay another Rs 1,000 crore before the end of this week.
Senior advocate Mukul Rohatgi, following the paymnet, appeared in the court on behalf of Vodafone Idea and urged the apex court to not take any coercive measure against the telecom operator after teh initial payment was made the last day. The Supreme Court, however, denied the plea and directed the Department of Telecommunication (DoT) to take stringent action including encashment of bank guarantees.
A financial bank guarantee is equal to two quarters of licence fee and other dues. This amount could be in the range of Rs 5,000 crore for Airtel and Vodafone Idea.
If Vodafone Idea shuts down, the market would shape as a duopoly of rivals Airtel and Reliance Jio, which many analysts and executives see as bad for the industry. These mobile carriers are expected to benefit in the long run by absorbing customers of Vodafone Idea, but its bankruptcy could have a greater negative impact on the Indian economy.