Vodafone-Idea may be one of the top three telcos in India in the absence of numerous others that had popped up in the previous decade. But it has been losing subscribers and struggling to pay dues on adjusted gross revenue (AGR), pending for more than 20 years. As it claws its way towards a revival, it has been reported that the Vodafone-Idea may shut down if it doesn’t get funds by February 2023.
How the decline was triggered
According to Economic Times, a government official has revealed that promoters of the company need to raise money by early next year to survive. UK-based Vodafone’s parent firm and its partner the Aditya Birla Group had agreed to infuse funds in the ailing telco when the government made a plan for revival of the sector. Both Airtel and Vodafone-Idea faced hefty AGR bills after India’s Supreme Court ruled in favour of the department of telecom, ordering telcos to pay the levy, which they had challenged in court over 20 years back.
Slipping down all alone
As most telcos had shut down, the two oldest service providers in India struggled with the burden and competition from a new and surging Reliance Jio. Both Airtel and Vi opted for a four-year moratorium, post which they had to pay the amount in six installments. While Airtel has paid four installments in advance, Vodafone-Idea agreed to give 32 per cent stake to the government via equity conversion.
On borrowed time?
But the government recently told the telecom firm that it will only go ahead with the stake acquisition if it rolls out 5G, which its rivals Airtel and Jio have already started. Amidst the crisis, Vodafone-Idea has come close to a shut down on multiple occasions. Initially after the verdict, the parent firm of Vodafone had refused to pour more funds to rescue the Indian joint venture, triggering concerns about its collapse.
The telecom service provider once again faced a service blackout, when a tower firm Indus asked it to clear dues, but later managed to buy more time for repayment. The promoters had told the government in 2021, that they will raise Rs 10,000 crore to save the company, and it was reported earlier this year that they sought to borrow up to Rs 16,000 crore from the SBI.
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