A customer at a Vodafone store in Mumbai. Photo: AFP

UK-based Vodafone Group Plc’s Chief Executive Officer Nick Read said the company’s Indian venture, Vodafone Idea, could face liquidation if it has to pay about US$550 million as spectrum fees within three months, as ordered by India’s Supreme Court.

Vodafone Idea is already saddled with a debt of $14 billion and Read has pledged not to put any more money into the venture. It has posted losses for the past 11 consecutive quarters.

Read told reporters that the situation was critical. “If you’re not a going concern, you’re moving into a liquidation scenario – can’t get any clearer than that,” he said.

Vodafone, which owns 45% of Vodafone Idea, wants a two-year delay on spectrum payments and lower license fees and taxes. It’s also calling for the spectrum payments demanded by the court to be spread over 10 years and is asking for a waiver on interest and penalties.

Read and Vodafone Chairman Gerard Kleisterlee met Indian government officials in September and set out the relief proposals. A government committee is considering the request and Read said he expected to hear more in the coming weeks.

Vodafone wrote off the carrying value of its share in the loss-making joint venture in the half-year results after analysts flagged the possibility of further impairments.

In a related development, Vodafone Idea chairman Kumar Mangalam Birla and senior company executives reportedly met top bureaucrats last week to seek urgent relief from the government, warning that failure to do so could pose stiff business challenges for the company.

Vodafone Idea and Bharti Airtel are among the worst hit by the top court judgment that backed the government’s broader definition of adjusted gross revenue to include non-core items. Bharti Airtel Chairman Sunil Bharti Mittal also met telecom officials to discuss the issue.

Meanwhile, Mukesh Ambani, the promoter of Reliance Jio, whose rock bottom pricing had disrupted India’s mobile phone industry, said the government should decline his rivals’ requests for aid.

He said the two entities have enough physical assets to sell to pay off government dues and they should be made to follow the Supreme Court order and no relief should be provided.

Legal remedy

Both Airtel and Vodafone Idea are talking to their legal teams about filing petitions to review the Supreme Court’s recent order on adjusted gross revenue after the Department of Telecom told them to approach the court, Indo Asian News Service reports.

A binding decision of the Supreme Court or High Court can be reviewed through a review petition on the grounds of apparent error. Under the Supreme Court Rules, 1966, such a petition needs to be filed within 30 days from the date of judgment or order. The deadline for paying the adjusted gross revenue is January 24.

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