Troubled telecom company Vodafone Idea, the worst hit by the Supreme Court order on adjusted gross revenue computation, has sought relief from the telecom department.
The company sought a refund of the goods and services tax to the tune of 80 billion rupees (US$1.12 billion) and a more staggered schedule to pay the court-mandated dues.
On February 14, the apex court denied all telecom operators relief from paying the dues. It also pulled up telecom companies and government officials for failing to comply with its earlier verdict delivered on October 24 last year regarding the settlement of revenue dues to the tune of 1.47 trillion rupees ($20.6 billion).
Vodafone Idea has so far paid 35 billion rupees and according to its self-assessment, it needs to pay 230 billion rupees ($3.21 billion), of which 70 billion rupees is the principal amount. However, according to the telecom department calculations, Vodafone had to pay 530 billion rupees ($7.4 billion).
The debt-laden company wants a three-year moratorium on the payment of dues and urged the government to reduce the license fee to 3% from the current 8% and bring down spectrum usage charges to 1% from the current 3%. The company also sought the government’s intervention to set a floor price for mobile services.
The original deadline for payment of dues was January 23. In a letter dated February 14, the telecom department raised the demand for adjusted gross revenues dues and said if it was not paid immediately, “necessary action will be taken in terms of the provisions of the license agreement without any further notice.”
Vodafone Idea’s request comes one day before the telecom department’s scheduled meeting to discuss the Supreme Court verdict and the relief to be provided to telecom firms.
The government is keen that no company shuts shop leading to large scale job losses. It does not want the telecom sector to be left with only two players – Bharti Airtel and Reliance Jio.
Industry analysts feel Vodafone Idea is on the brink of collapse and needs urgent relief. The company chairman, Kumar Mangalam Birla, had a series of meetings with telecom officials and has also met Finance Minister Nirmala Sitharaman.
Its rival Bharti Airtel is comparatively better off. It has already paid 100 billion rupees out of its estimated liability of more than 350 billion rupees. It plans to pay the remainder before March 17.
The government is reportedly examining several proposals, including setting up a fund that will lend money to telecom companies at a concessional rate to repay their dues and also allowing companies a revised payment plan.
The Supreme Court will have its next hearing on March 17 and has asked managing directors and directors of the companies to be present in person if there is a violation of its order.
While delivering its verdict in a 14-year legal battle, the court widened the scope of adjusted gross revenue to include income from non-core items. The dispute arose when telecom companies migrated to a new system offered by the government in 1999, under which operators agreed to share a certain percentage of revenue with the government.
The operators argued that the revenue should be made up of income from telecom services. But the telecommunications department said it should include all revenue earned by an operator, including non-core telecom operations. The Supreme Court delivered its judgment in favor of the department.