Indian telecom companies are facing severe setbacks due to trade competition. The AGR fee in particular has become a huge burden on telecom companies, in which case the Modi-led central government is at a critical juncture to save not only the telecom company but also the companies that have lent to the telecom companies.
Recently Vodafone Idea paid its license fee at the last minute, when it did not even have the money to pay. Earlier, Kumar Mangalam Birla, a shareholder in the company, had said he was ready to give his shares to the government or a state-owned company.
The federal government is planning to announce a new offer to save Vodafone Idea and Airtel, which are mired in AGR charges.
Federal Government Program
What is the mechanism by which the federal government can offer Vodafone Idea and Airtel to repay their tariffs in 20 years? What are the structures ..? Government officials said they were investigating. But no official announcement has been made by the government so far.
AGR fee outstanding
Whatever concessions are to be made in the AGR fee, the order issued by the Supreme Court must be taken into consideration. The reason is that the Central Government has given telecom companies 20 years to pay their AGR fees and in this case, the Supreme Court has ordered them to pay the AGR fees in full within the next 10 years, i.e. by March 31, 2031.
Violation of Supreme Court order
At present, the federal government does not have to violate the Supreme Court’s order, but at the same time, the health sector in the telecom sector is in a position to maintain the overall structure of banks, which lend to telecom companies, and employees who work in telecom companies, government officials said. That is why the federal government is exploring how to do this extension.
CEO of Vodafone Idea
At a recent quarterly results release event, Vodafone Idea CEO Ravinder Thackeray explained that the government did not have the power to extend the deadline for payment of AGR fees. Yet the federal government is exploring ways to save the telecom sector and its employees.
Profit for Vodafone Idea
With Vodafone Idea currently in place, AGR is not only an extension of the payment period but also a temporary offer to pay a few installments, which the company will be able to withstand for the next few quarters. Vodafone Idea is in a very bad position.
Vodafone Idea Financial
At the end of June, Vodafone Idea had a cash debt of Rs 920 crore and a debt burden of Rs 1.9 lakh crore. Of this, AGR charges alone were Rs 58,254 crore, of which Vodafone Idea paid Rs 7,854 crore. The next AGR is expected to pay the outstanding balance of Rs 9,000 crore by March 2024.
That’s the second chance
Under the current circumstances, the March 2024 installment can only be avoided if new investment is made or the government offers concessions, otherwise the company will be forced into a major problem or bankruptcy. Meanwhile, Vodafone is planning to launch Idea 5G service.
