AGR DUES: Vodafone Idea says it is checking how much it can pay

Vodafone Idea, one of India’s top telecom operators, said it is currently assessing “the amount that it will be able to pay to DoT” as directed by the Supreme Court.

The company has total liabilities in excess of Rs 50,000 cr on this account.

However, Vodafone Idea does not enough resources to pay the amount in full, as directed by the Supreme Court. As such, the company seems to have decided to pay what it can.

“The Company proposes to pay the amount so assessed in the next few days,” it said.

It also reiterated today that it does not have the wherewithal to pay the full amount as demanded by the Department of Telecom, and hoped that the government would modify the demand made on it.

“As disclosed in the Company’s financial statements for quarter ending December 31, 2019, the Company’s ability to continue as a going concern is essentially dependent on a positive outcome of the application for modification of the Supplementary Order,” it said.

Rival Bharti Airtel too said it would pay Rs 10,000 cr by February 20. The company is estimated to be required to pay around 35,000.

DoT has also demanded Rs 1.7 lakh crore from pipeline operator GAIL, Rs 22,062 cr from Powergrid Corporation, Rs 48,489.26 crore from Oil India, Rs 15,020 cr from Gujarat Narmada Valley Fertilizers and Chemicals and Rs 5,482 cr from Delhi Metro Rail Corporation.

The dues were demanded after a Supreme Court bench headed by Justice Arun Mishra ruled that any company that has a telecom license has to pay a share of its revenue to the government, whether or not the revenue was generated from its telecom business or not.

Companies have so far been paying the levy only on their telecom revenues.

There is no clarity about what will happen to companies like Gail India as the total value of the company is only Rs 55,300 cr, going by its share price. As such, it will be difficult for it to pay Rs 1.7 lakh cr.

Similarly, the total value of Vodafone Idea is only around Rs 11,000 cr, while the demand is for around Rs 53,000 cr.

Moreover, Vodafone Idea is unlikely to be able to raise this kind of money from banks or any investors, as nobody is likely to invest Rs 53,000 cr in a company that is currently valued at Rs 11,000 cr.

The company has several options before it, including filing for bankruptcy and selling itself to another company. However, it remains to be seen if any company will buy Vodafone Idea even if it is offered for free, given that the buyer will have to pay the Rs 53,000 cr to the government from their pocket after the transaction.