Vodafone Idea could go bankrupt if forced to pay Govt's fees


6pack

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Vodafone Idea will seek a waiver of interest and penalties payable on its licence fee dues even as analysts said the telco could be bound for bankruptcy if it’s asked to shell out $4 billion (Rs 28,309 crore) after the Supreme Court ruled on the definition of adjusted gross revenue for telecom companies.
The Supreme Court judgement backing the government’s broader definition of adjusted gross revenue to include non-core items “has financial implications and represents a significant event with respect to the company,” Vodafone Idea said in an exchange filing Friday.
The telco is reviewing the ruling and plans to engage with the Department of Telecommunications to urge it to “consider granting relief, including a waiver of interest and penalties.”
Vodafone Idea’s stock plunged to a 52-week low of Rs 3.66 on Friday before closing at Rs 4.11 on the BSE. The shares had plunged over 23% after the court’s ruling on Thursday.
Analysts said if Vodafone Idea is denied relief by the government, it would have a negative cascading effect on DoT, Vodafone Idea’s bankers, promoters & its customers.

“An upfront liability (of Rs 28,309 crore) for Vodafone Idea may move it to the National Company Law Tribunal (NCLT) if the government does not salvage the situation,” IIFL Institutional Equities said. Such an outcome “would be a lose-lose situation for all major stakeholders as it raises the risk of Vodafone Idea’s Rs 90,000 crore spectrum debt and its over Rs 30,000 crore exposure to banks going bad,” it said.
Should Vodafone Idea take the NCLT route, it said, the government could lose out on Rs 12,000 crore of annual receipts it collects from the company as spectrum dues.
Its bankers could be staring at forfeiting a portion of loans and its promoters – UK’s Vodafone Group Plc and the Aditya Birla Group – could lose control of the company as banks would have exposure on promoter funding for the recent rights issue.

Vodafone Idea’s 320 million customers may face service disruptions if the company ends up in bankruptcy court, it added.

Credit Suisse said Vodafone Idea would need an immediate equity infusion, while brokerage Kotak said arranging another large share sale to fund huge licence fee pay outs won’t be easy for the promoters as the “amounts are a multiple of the company’s current market capitalisation,” which stood at a modest Rs 11,810.24 crore on Friday.
Analysts said things could really spin out of control if DoT asks the telco to shell out an additional Rs 11,000 crore towards outstanding spectrum usage charges, which is also computed based on AGR.
Against a total pay-out of $5.5 billion in unpaid licence fees and SUC dues, the telco has $3 billion of cash, noted Nitin Soni, director (corporates) at global rating company Fitch. The telco also faces “a shrinking subscriber base, reduced cash generation and a stretched balance sheet.”
 

nRiTeCh

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I wonder what makes vodafone continue its biz here amid tons of loses!! It should quit India and better focus on UK region where it belongs.
They should had quit 2 yrs ago when jio kicked their butt too hard among Idea and Airtel as well. Merging with Idea was a big mistake increasing their loses further.
 

6pack

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Even Airtel has lot of dues to pay.


Looks like 5G spectrum sale will be flop since no one has money now or in next few months.

Top Bharti AirtelNSE -0.55 % and Vodafone Idea executives spent the Diwali weekend scrambling to draft a response after the Supreme Court ordered telecom companies to pay dues that could be in excess of a cumulative Rs 1.3 lakh crore.
Executives of the companies plan to meet top government officials starting today on strategies, said people with knowledge of the matter. The two carriers have less than three months to pay what could add up to more than Rs 80,000 crore in licence fees and spectrum usage charges (SUC), following the Supreme Court order broadening the definition of adjusted gross revenue (AGR) to include non-core items.
Officials said the two are combing through the judgment and planning a financial and legal plan to raise funds that will allow them to stay viable.
“When the industry is under a death sentence, tomorrow looks like the least of your worries,” said Rajan Mathews, director general of lobby group Cellular Operators Association of India (COAI). “Certainly, 5G will be under the cloud of the ability of operators to continue their operations with any reasonable expectations of proper returns on their investment.”
 

6pack

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Seems like Vodafone might exit India.

https://economictimes.indiatimes.com/industry/telecom/telecom-policy/how-the-indian-telecom-industry-is-heading-towards-a-duopoly/articleshow/71849129.cms

A decade after its struggle in India, Newbury, England-based Vodafone Group has one foot out the door. CEO Nick Read said in September that the company isn’t keen to plow any more money into the local venture, in which Vodafone holds about 44%. A Vodafone Group spokesman declined to comment for this story, while Idea said Thursday that it isn’t aware if its British partner is looking to exit India.
 
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chiron

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No idea why they are dragging out selling BSNL to the Ambanis. If nothing, think of all the prime real estate they have all over the country.
 

6pack

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No idea why they are dragging out selling BSNL to the Ambanis. If nothing, think of all the prime real estate they have all over the country.
Lol. Maybe they want to bail both MTNL and BSNL out first though SBI or LIC and then sell it off.

Look at the mess Air India is in now. Congress should have sold it of two decades back to the Tata's.
 

ssslayer

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pratikb

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I wonder what makes vodafone continue its biz here amid tons of loses!! It should quit India and better focus on UK region where it belongs.
They should had quit 2 yrs ago when jio kicked their butt too hard among Idea and Airtel as well. Merging with Idea was a big mistake increasing their loses further.
They want indian customer data metadata or whatever you want to label it as.
Post automatically merged:

Lol. Maybe they want to bail both MTNL and BSNL out first though SBI or LIC and then sell it off.

Look at the mess Air India is in now. Congress should have sold it of two decades back to the Tata's.
Congress itself finished air india and put up the blue airline. Why would they sale it.
 

swatkats

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Vodafone-Idea bound to shutdown.

Present VoID users.. Are you going to Join Jio/Airtel/BSNL?

 
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6pack

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100% Voda-Idea will shut down in coming months. Their CEO's themselves don't see any good outcome of putting more money in this field now.
 

raksrules

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Why not Jio rather than such a suicide dive?
I got to know from another TE member that in JIO too I will face exact same issue with band 40. Also jio network is pretty spotty at my work and especially in the room where I sit.

Also worst case if Vodafone decides to shutdown, we will get a month or so to port out right? I can always port out then if it comes to it.


I will then switch back to Airtel (if I go to Vodafone now) at the end of year when I plan to buy my next iPhone (assuming Vodafone is still afloat then).
 

nRiTeCh

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I got to know from another TE member that in JIO too I will face exact same issue with band 40. Also jio network is pretty spotty at my work and especially in the room where I sit.

Also worst case if Vodafone decides to shutdown, we will get a month or so to port out right? I can always port out then if it comes to it.


I will then switch back to Airtel (if I go to Vodafone now) at the end of year when I plan to buy my next iPhone (assuming Vodafone is still afloat then).
My office teammate who was on vodafone mumbai decided to port to bsnl. Today he lost vodafone network signal and no network to bsnl as well and vodafone says the porting will be completed by 24th feb. Till then he is out of connectivity through all means unless he is at home on wifi...
 

6pack

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Jio should buy it
Buying it means buying voda-idea losses too. Their losses is in thousands of cores while JIO is just a few hundred. No good business man will buy that company. It's like air India. No one wants it.
 

netant

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Jio should buy it
That is very short-sightedness comment, this would be the worst possible thing for the telecom industry in India.
Right now the telecom industry is in oligopoly if Jio buys this, that would be monopoly.

These people are seeking help for long back

But current govt is deaf towards them, and indirectly trying to force idea-voda to be acquired by Jio.
Vodafone, then soon BSNL all will be under Jio.
Airtel is struggling to survive as well. Airtel will never have to resource to complete with Jio at any level. Apparently they are going down for quite a long time, and they recently reported a consolidated loss of Rs 23,045 crore in last quarter.

This is far too deep conspiracy then it appear on tip.
But if Vodafone exit India, it will send a very wrong information to world. people will scare to venture out in India. reality of "easy of business" joomla will have a live example to the world.
Post automatically merged:

Buying it means buying voda-idea losses too. Their losses is in thousands of cores while JIO is just a few hundred. No good business man will buy that company. It's like air India. No one wants it.
Jio has about 2700 cr dues. what you said is 100% correct in straight forward "business" thinking, which alas is not in this case.

This entire situation is result of a pre planned steps taken over the course of multiple years.
Just want to show you a parallel incident - please see this video

govt can lend thousands of crores only to their actual masters and not all businessman. for example - https://www.deccanchronicle.com/nation/politics/200517/rs-72-thousand-crore-of-adani-loans-waived-cpm.html

Ambanis are always in top list to get discreet monetary benefits. here is a list of big defaulter, http://www.catchnews.com/business-economy-news/shock-and-awe-the-top-10-indebted-companies-in-india-1451572290.html
 
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6pack

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Even this video is good for knowing what will happen if voda-idea close down.


Seems after march 17 SC ruling, we will know the final outcome.
 
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