Vodafone Idea will shut shop if there is no government relief: KM Birla


The Aditya Birla Group will let its telecom joint venture with Vodafone opt for insolvency if the Centre does not provide substantial relief on the adjusted gross revenue (AGR)-based dues, which is over 40,000 crore.

“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,” the company’s chairman Kumar Mangalam Birla said, calling AGR as the “big elephant” that needed to be addressed urgently.

Birla was speaking at the Hindustan Times Leadership Summit. Birla indicated that his group will not invest any money in the company in the absence of relief from the government. “There is no sense that good money should follow bad money,” he said.

“It’s a very sad thing to happen though I don’t want that to happen,” Birla said.

Birla agreed with Vodafone Group CEO Nick Read who had said that the situation the sector (telecom) was facing was critical. “If you’re not a going concern, you’re moving into a liquidation scenario – can’t get any clearer than that,” he had reportedly said.

The one-year old telco — born out of the merger of Vodafone India and Idea Cellular — posted a massive Rs 50,921.9 crore loss in the July-September quarter, and has internally pegged its additional AGR liability at Rs 44,200 crore towards licence fees, spectrum usage charge (SUC), interest and penalties that need to be paid in under three months.

Vodafone Idea said its ability to continue as a concern hinges on getting relief — including a waiver on the interest, penalties on the AGR-related dues, lower taxes and levies, and a moratorium on spectrum payments — from the government. Birla said providing relief is very much in the government’s hands as it has won the AGR case, and can act in the interest of the telecom sector, the economy and consumers.

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Bharti Airtel and Vodafone Idea have a petition with the Supreme Court (SC) to review the 24 October judgement on AGR.





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