Vodafone Idea will shut shop if it doesn’t get relief, says Kumar Mangalam Birla
Vodafone Idea would have to shut shop if the company does not get any relief in the wake of the Supreme Court order to phone companies to pay dues of up to Rs 92,000 crore to telecom department, company chairman Kumar Mangalam Birla asaid at the Hindustan Times Leadership Summit here.
“If we are not getting anything, then I think it is the end of story for Vodafone Idea,” he said at the HT Leadership Summit. But he indicated that the phone companies did expect more support from the government.
The Supreme Court’s October order came in a 14-year-long case which had the telecom department claim that phone companies had under reported their revenues and paid lower spectrum charges and other levies.
“They have realised the fact that this is a very critical sector, the whole digital India program rests on this, and it is a strategic sector. They have publicly stated that they want three players from the private sector and one player from the public sector, so I think we can expect much more stimulus from the government because it is required by the sector to survive,” KM Birla told the gathering of business leaders, diplomats, political leaders and commentators at the summit.
He was asked if the company is still hopeful of government relief for the debt-laden telecom sector.
KM Birla, however, underscored that he is hopeful that a situation where the company would have to exit would not happen. “But, at the same time, if you ask me specifically, it is true we will shut shop if we don’t get relief,” he said.
“It does not make sense to put good money after bad… ,” he said.
Birla’s comments sent Vodafone Idea shares tumbling in Friday’s trade, slipping 8.5% on the BSE to Rs 6.69. The shares have trebled in less than six months from their 52-week low of Rs 2.61. At the same time, the company faces an uncertain future.
Vodafone Idea owes the DoT Rs 40,000 crore while it has a cash balance of half of that. Birla’s Idea Cellular and British telecom giant Vodafone plc’s India unit merged last year to compete with the onslaught of free voice calling and cheap data unleashed by Mukesh Ambani’s Reliance Jio.