- Nirmala Sitharaman's assurance came amid mounting losses in telecom
- Vodafone Idea, Bharti Airtel reported quarterly losses of Rs 74,000 crore
- The losses came after a top court verdict on adjusted gross revenue
Union Finance Minister Nirmala Sitharaman on Friday allayed concerns of mounting stress on the country's telecom sector, saying that the government was intent on ensuring that no company shuts operations due to financial unsustainability. "We want no company to shut their operations. We want everyone to flourish," she said at a press meet in New Delhi.
Ms Sitharaman was responding to questions on Vodafone Idea and Bharti Airtel reporting major losses in the September quarter due to statutory dues arising from a recent Supreme Court ruling.
The Finance Minister also said 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. 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," he said.
(With inputs from Agencies)