Aditya Birla Group may exit joint venture Vodafone Idea, opts for insolvency if govt does not provide relief: Report

As per Department of Telecom's estimate, the liability of Vodafone Idea is around Rs 54,183.9 crore

FP Staff November 14, 2019 15:23:22 IST
Aditya Birla Group may exit joint venture Vodafone Idea, opts for insolvency if govt does not provide relief: Report
  • As per Department of Telecom's estimate, the liability of Vodafone Idea is around Rs 54,183.9 crore

  • The Supreme Court in its last month's ruling said, "We give three months' time to deposit the amount, which is due and compliance be reported"

  • The Aditya Birla Group will not infuse any fresh equity into Vodafone Idea Ltd, according to news reports

The Aditya Birla Group may exit their joint venture Vodafone Idea, according to news reports. As per the Department of Telecom's (DoT) estimate, the liability of Vodafone Idea is around Rs 54,183.9 crore. The DoT has given the option to telecom operators to clear all the dues on a self-assessment basis.

The Supreme Court in its last month's ruling said, "We give three months' time to deposit the amount, which is due and compliance be reported."

A senior group executive was cited in The Economic Times report as saying that the Aditya Birla Group will not infuse any fresh equity into Vodafone Idea Ltd, its telecom joint venture with Vodafone Group of UK, and let it opt for insolvency if the government does not provide substantial relief.

Aditya Birla Group may exit joint venture Vodafone Idea opts for insolvency if govt does not provide relief Report

Representational image. Reuters.

The official told the newspaper that the telecom business was unviable and unsustainable in India and would only drag down the group's profitability. The company had to, therefore, rethink its capital allocation, the report said.

The official agreed with the earlier statement of Vodafone CEO Nick Read on 13 November who said the telecom firm's future in India could be in doubt unless the government stopped hitting operators with higher taxes and charges, after a court judgment over licence fees resulted in a 1.9 billion euro group loss in its first half.

Vodafone had asked the government for a relief package comprising a two-year moratorium on spectrum payments, lower licence fees and taxes and the waiving of interest and penalties on the Supreme Court case, which centered on regulatory fees.

“Financially there’s been a heavy burden through unsupportive regulation, excessive taxes and on top of that we got the negative supreme court decision,” he was cited as having said on Tuesday, according to a Reuters report.

However, Read said on 14 November that he was misquoted in the media. The Indian government on Wednesday expressed displeasure over business uncertainty remark made by Vodafone Group in India citing the Supreme Court judgment that puts around Rs 1.33 lakh crore liability on telecom players that are operational at present.

Read is learnt to have written back to Prime Minister Narendra Modi promising that the company will remain invested and blamed the media for distorting his remarks made around telecom business in India.

With inputs from agencies

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