Just a few hours before Vodafone Group CEO Nick Read’s meeting with Union Finance Minister Nirmala Sitharaman and then Telecom Minister Ravi Shankar Prasad on Friday, the company announced that it had completed assessing its dues linked to adjusted gross revenue (AGR). At Rs 21,533 crore, Vodafone Idea’s calculation of the AGR liability turned out to be less than half of the government estimate.
While Read offered “no-comments” after his meetings with the ministers, sources in the Department of Telecommunications (DoT) indicated that the company was “positive” about India and that it wanted to make a ‘’new and good beginning’’ in the country.
Read, who’s maintained that it would be tough to continue as a going concern without relief from the government, was advised to pay up at least the principal amount of the AGR dues before March 17, the next date of the Supreme Court hearing. “We want Vodafone Idea to stay invested in India…. With the digital push by the government of the day, there’s enormous business opportunity in India. But there was need for the company to upgrade its technology,” a top official said.
It is learnt that the Vodafone brass “acknowledged” not making provision for AGR dues in the books of accounts earlier.
“The company was in contempt of the Supreme Court, as it has not paid the entire amount assessed by the DoT. It will at least have to pay the principal amount to avoid contempt from the apex court,” the official added.
Earlier in the day, Vodafone Idea, the UK telco’s joint venture with Kumar Mangalam Birla-led Idea, in a statement to the stock exchanges said, "The company has today filed its self-assessment of the AGR liabilities with the DoT. The self-assessment discloses the company’s AGR liabilities to aggregate Rs 21,533 crore, including a principal amount of Rs 6,854 crore for the period from FY 2006-07 to FY 2018-19 and interest up to February 2020.”
However, according to official calculations by the DoT, Vodafone Idea owes the government more than Rs 53,000 crore as part of the AGR dues. Of this, the company has paid Rs 3,500 crore.
A few days ago, Vodafone had made a strong plea for setting off Rs 8,000 crore of GST (goods and services tax) credits, a three-year moratorium along with 15-year staggered payment of AGR dues at a simple interest rate of 6 per cent, drastic cut in licence fee and fixing of a floor price for calls and data.
In December, Birla had said Vodafone Idea may have to shut if there was no relief on the statutory dues. “If we are not getting anything, then I think it is the end of the story for Vodafone Idea,” Birla had said. “It does not make sense to put good money after bad... We will shut shop." Read in a post-earnings call a few months ago had made a similar point.
Last month, the apex court rejected a plea by companies such as Bharti Airtel and Vodafone Idea for extension in the payment schedule and asked them to deposit the full AGR dues, estimated at Rs 1.47 trillion for the industry. It threatened to start contempt proceedings against top executives of these firms for non-payment.
Last October, the Supreme Court had upheld the government’s definition of AGR, by which it calculates levies on telecom operators. The order dealt a blow to the telecom industry, which had for years argued that AGR should only include revenue from core
telecom operations. Telecom operators now have to pay dues of the past 14 years along with interest and fines.