Vodafone Idea and Bharti Airtel facing major losses in the September quarter due to statutory dues
NEW DELHI| On Friday Nirmala Sitaraman while answering the question said, “We want no company to shut their operations. We want everyone to flourish”. Sitaraman while addressing a press meet express her concern on the telecom sector which is facing huge loss as per the reports. Finance Minister said that the government was intent on ensuring that no company shuts operations due to financial unsustainability
Vodafone Idea and Bharti Airtel reported facing major losses in the September quarter due to statutory dues arising from a recent Supreme Court ruling.
Sitaraman added that a Committee of Secretaries appointed to formulate measures aimed at mitigating financial stress in the sector was yet to take a “final decision” on the matter.
Last month, the Supreme Court rejected an appeal against the government’s definition of adjusted gross revenue and allowed the Department of Telecommunication (DoT) to recover dues amounting to Rs. 1.42 lakh crore from various telecom companies. Two days ago, DoT issued a notice asking them to pay up within three months as directed by the Supreme Court.
Consequently, Vodafone Idea and Bharti Airtel made provisions for their liabilities arising from the verdict in their latest September quarter results thereby reporting a whopping combined loss of nearly Rs. 74,000 crore. While Vodafone Idea posted a loss of Rs. 50,921 crore, the highest ever quarterly loss by any corporate in India, Airtel’s figure came up to Rs. 23,045 crore.
Stung by the colossal loss, Vodafone Idea said its ability to continue as a going concern is dependent on obtaining relief from the government and positive outcome of the proposed legal remedy.
Also Read: Telecom Triple-threat : Vodafone Idea v/s Airtel v/s Jio
According to the British media, Vodafone CEO Nick Read has even issued an ultimatum that the company won’t provide more capital for its India business unless the authorities make provisions enabling it to compete with domestic players like Mukesh Ambani’s Reliance Jio.
Mr Read’s ultimatum is to communicate to the government that “either they should take their boots off the neck of the industry and allow it to better compete with Mukesh Ambani on 5G, or Vodafone Idea is destined for a potentially chaotic final act with potential repercussions for India’s international standing”, news agency IANS quoted one such report as stating.
The company is currently in the process of filing a review petition against the Supreme Court order.
Gopal Vittal, Airtel CEO for India and South Asia, hoped that the government will take a considerate view on adjusted gross revenue given the “fragile state of the industry”. “On the Supreme Court verdict, we continue to engage with the government and are evaluating various options available to us”.
As an independent media platform, we do not take advertisements from governments and corporate houses. It is you, our readers, who have supported us on our journey to do honest and unbiased journalism. Please contribute, so that we can continue to do the same in future.
