Amid talks of the government mulling encashing of bank guarantee over default in payment of dues, Vodafone Idea Chairman Kumar Mangalam Birla on Tuesday met Telecom Secretary Anshu Prakash as he looked for options to keep the company afloat.
After the meeting, Birla said he “cannot say anything at the moment.” Birla, who met the telecom secretary for over an hour, was accompanied by Ravinder Takkar, MD & CEO of Vodafone Idea.
He refused to respond to queries on whether or not Vodafone Idea Ltd (VIL) would default on payment of AGR dues or if the company could head towards insolvency.
Vodafone Idea on Monday paid Rs 2,500 crore to DoT and promised to pay another Rs 1,000 crore before the end of the week.
But the amount paid for now is less than 5 per cent of the dues that the DoT estimates the company owes to the government following a Supreme Court ruling that asked for including non-telecom revenues of telcos in computing statutory payments such as licence fee and spectrum charges.
The Supreme Court on Monday refused to stop DoT from taking any coercive steps for recovery of dues from Vodafone Idea.
In December, Birla said Vodafone Idea may have to shut if there is no relief on statutory dues. “If we are not getting anything, then I think it is the end of the story for Vodafone Idea,” Birla had said. “It does not make sense to put good money after bad… We will shut shop.” After a Supreme Court rap on February 14 for missing the payment deadline, top telecom firms Bharti Airtel, Vodafone Idea and Tata Teleservices on Monday scrambled to pay a part of the outstanding dues.
While Vodafone Idea put in Rs 2,500 crore and promised another Rs 1,000 crore later this week, Airtel paid Rs 10,000 crore. Airtel said it will clear the remaining dues before the next date of hearing on March 17 but Vodafone Idea has so far not provided a clear deadline for making all payments.
Tata Teleservices paid Rs 2,197 crore, the entire outstanding it believes to have arisen after the October ruling of the apex court for calculating dues after adding non-telecom revenues.
“Tata Teleservices and Tata Teleservices (Maharashtra) Ltd have made a payment of Rs 2,197 crore to the DoT towards licence fee and spectrum usage charges,” the company said in a statement on Monday.
The payment is to settle all its AGR outstanding.
“TTSL and TTML have also submitted to DoT the details of calculations in support of the payment,” it had said.
The Department of Telecommunications (DoT) — which last week drew flak for ordering no coercive action even after telcos missed the January 23 payment deadline set by the Supreme Court — is mulling the option of encashing bank guarantees given by firms when they got telecom licences, as none of the telcos have paid the full amount.
Encashing of the bank guarantees may sound the death knell for companies such as Vodafone Idea which has been struggling to garner the dues.
A financial bank guarantee is equal to two quarters of licence fee and other dues. This amount could be in the range of Rs 5,000 crore each for Airtel and Vodafone Idea.
The Supreme Court last week rejected a plea by companies such as Bharti Airtel and Vodafone Idea for extension in the payment schedule and asked them to deposit an estimated Rs 1.47 lakh crore in past dues for spectrum and licences. It threatened to initiate contempt proceedings against top executives of these firms for non-payment.
Some telecom firms are already struggling with mounting losses and debt and the additional liability has raised concerns of them defaulting on existing loans.
Of the estimated dues that include interest and penalty for late payments, Airtel and Vodafone Idea owe about 60 per cent.
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