This Article is From Feb 19, 2020

Officials Waiting For "Political Call" On Telecom Crisis, Say Sources

Vodafone Idea, which has incurred a loss of over Rs 2 lakh crore over the last decade, is likely to be the worst hit of the lot.

Officials Waiting For 'Political Call' On Telecom Crisis, Say Sources

Vodafone Idea has asked the centre not to attempt overnight recovery of the dues.

New Delhi:

Four days after the Supreme Court pulled up mobile operators over non-payment of lakhs of crores in pending dues, telecom ministry officials said on Tuesday that they are awaiting an approval from the top to invoke bank guarantees in compliance with the verdict, hinting at a political call that could decide the fate of India's crisis-hit mobile carriers.

Vodafone Idea, which has incurred a loss of over Rs 2 lakh crore over the last decade, is likely to be the worst hit of the lot. The company has said that while it owes the government Rs 7,000 crore, the total sum to be shelled out may come up to around Rs 25,000 crore when taken along with interest and penalty components -- a sum that it cannot afford right now.

Both chairman Aditya Kumaramangalam Birla and Vodafone Idea Chief Executive Officer Ravinder Thakkar met Telecom Secretary Anshu Jain on Tuesday to discuss the crisis.

"The government should not rock the boat by encashing the bank guarantees or the company will close tomorrow," Mukul Rohatgi, the senior counsel for the company, warned in an interview with NDTV on Monday.

Mr Birla too had earlier hinted at a premature "end of the story for Vodafone Idea" if the centre decides against providing relief.

However, sources indicate that officials want to invoke the bank guarantees without further delay for fear of being hauled up by the Supreme Court again. "They are just awaiting a political call on the matter," one of them said.

The dispute originated in 1999, when the centre allowed mobile operators to pay a share of their revenue towards spectrum charges instead of an upfront fee. The revenue share was supposed to be calculated on the basis of the companies' Adjusted Gross Revenue (AGR).

However, mobile operators differed with the Department of Telecommunications (DoT) over what constitutes the AGR. While mobile operators maintained that the AGR is restricted solely to income generated through telecom services, DoT - through a clarification in 2002 - said it should figure in forex gains and bank deposit interest as well. The mobile operators refused to relent and went to court the following year.

Last month's Supreme Court verdict delivered a telling blow to mobile operators, with a bench headed by Justice Arun Mishra ruling that DoT's definition of the AGR was correct from day one. While 11 of the 16 companies against whom the demand was raised have shut shop, Mukesh Ambani's Reliance Jio remained unaffected due to its late entry into the telecom business.

Mukul Rohatgi warned that any attempt by the centre to make telecom operators pay the dues overnight will not bode well for the country. "The government should also wake up to the situation, otherwise this sector, which is very, very stressed, will have only two operators, which is like semi-monopoly, which is what we call oligopoly," he told NDTV.