Voda Idea: As threat of closure looms, Kumar Mangalam Birla meets DoT secy

Vodafone Idea Chairman Kumar Mangalam Birla and Chief Executive Officer Ravinder Takkar met Telecom Secretary Anshu Prakash on Tuesday morning to seek relief from coercive action, a day after the Supreme Court had dismissed the company’s plea. Takkar made a second visit to the Department of Telecommunications (DoT) in the evening for another round of talks. 

These talks were critical for Vodafone Idea to stay in business after the SC had on Monday denied any protection from its bank guarantee being invoked by the DoT if it failed to pay up the dues linked to adjusted gross revenue (AGR).

While the government remained silent through the day on the next step it would take on the matter, the Vodafone crisis seemed to have caught the attention across departments including the Prime Minister’s Office (PMO). Telecom Minister Ravi Shankar Prasad had a meeting with Prime Minister Narendra Modi, possibly to discuss a way out for the telecom sector facing a total AGR payout of Rs 1.47 trillion and more specifically to prevent Vodafone Idea from collapsing. Sources said a Cabinet meeting scheduled for Wednesday would discuss the telecom issue. Also, there were indications that the government could explore the Ordinance route to help save the telecom sector stuck in a 16-year-old legal dispute related to AGR, but it could not be independently verified. 

Officials in the DoT, waiting for legal advice, refused to comment on whether the telco’s bank guarantee would be encashed or if there was a move to prevent Vodafone Idea from shutting shop. Prasad, who was in meetings with three secretaries — telecom, information technology and law — too did not comment. Vodafone Idea as well as UK-headquartered Vodafone plc did not respond to any queries, either.

The financially stressed firm, which has maintained that it would be difficult to continue as a going concern without any relief on its AGR dues, estimated at over Rs 50,000 crore, had recently approached the top political leadership as well, requesting to step in. 

The company on Monday paid Rs 2,500 crore as a portion of its AGR dues and said another Rs 1,000 crore would be paid by Friday. It told the exchanges that funds were being arranged to pay the remaining amount. Vodafone Idea’s counsel Mukul Rohatgi had told the media on Monday that any move to encash the company’s bank guarantee would result in its closure.

The telecom licence rules state that the licensor or the DoT can encash bank guarantees and convert them into cash security if the service provider violates any term of the licence. The other operator that had asked for a staggered payment — Bharti Airtel — paid Rs 10,000 crore to the government on Monday out of its pending AGR dues of Rs 35,500 crore, while committing to make the remaining payment before March 17. Tata Teleservices, which sold its mobile business to Airtel, paid Rs 2,197 crore against estimated dues of Rs 14,000 crore. Reliance Jio had already paid Rs 195 crore towards AGR dues.