Vodafone Idea, Airtel Make Partial Payments After SC Tough Talk

Vodafone Idea’s board on Monday decided to immediately pay Rs. 2,500 crore to the department of telecommunications (DoT) and pay an additional Rs. 1,000 crore before the end of the week. “The board will take further stock of the situation to see how additional payments can be made,” Vodafone Idea said in an exchange filing. Vodafone Idea’s dues total about Rs. 50,000 crore, according to government estimates.

On the same day, Bharti Airtel paid Rs. 10,000 crore out of its total dues of Rs. 35,586 crore to DoT.

Telecom operators have scrambled to pay their dues to the government after the Supreme Court on Friday pulled up companies as well as officials of DoT for the delay in payments, in contravention of its 24 October order.

The original payment deadline was 23 January.

Soon after the court’s observations, DoT raised demand for the dues and said “necessary action will be taken in terms of the provisions of the licence agreement without any further notice” if dues were not paid immediately. Although DoT can encash bank guarantees of telecom operators in case of a default, it hasn’t resorted to this measure yet. DoT did not respond to an emailed query till press time.

An oral application made before the Supreme Court on Monday for directions to be issued to DoT not to take any coercive steps for recovery of dues was not entertained, Vodafone Idea said.

Vodafone Idea’s lawyer, Mukul Rohatgi, mentioned a plea seeking more time to pay the dues before a bench of Justice Arun Mishra and Justice M.R. Shah. No formal application was filed in the court by the company and the court refused to hear the plea.

In a letter to DoT on Monday, Bharti Airtel said it is “in the process of completing the self-assessment exercise expeditiously and will duly make the balance payment upon completion of the same, before the next hearing in the Supreme Court”. Mint has reviewed a copy of the letter.

Tata Teleservices, which was acquired by Bharti Airtel, also paid Rs. 2,197 crore to DoT towards licence fees and spectrum usage charges, the company said in a statement on Monday.

Even though Vodafone Idea has paid part of its dues, the outlook for the company remains critical.

Vodafone Idea’s ability to continue as a going concern is now dependent on a positive outcome of its modification plea filed in the apex court, the company said in an exchange filing on Saturday.

“We believe that given Vodafone’s weak balance sheet and promoters’ earlier statement of their inability to infuse capital, the company is more likely to file for bankruptcy than meet the demand for dues. We suspend our rating on Vodafone Idea, given this development,” ICICI Securities said in a 16 February note.

Oil minister Dharmendra Pradhan on Monday said he believes non-telecom companies are not covered by the Supreme Court order that asked telecom licence holders to pay dues after including non-telecom revenues, news agency PTI reported.

“The DoT has served notice to government oil companies due to some communication gap. We have placed our side after legal consultations,” he said. “Telecom is not the core business of either GAIL or OIL (Oil India Ltd) or PowerGrid,” he said, adding that they ventured into the telecom business thinking of multi-utility for internal consumption.―Livemint