Government wants to save Vodafone - Idea. Stock Market News.



Why is the government looking for ways to save Vodafone - Idea?


To save the telecom company Vodafone - Idea from being shut down, the Modi government is working on several options. Under this, the option of giving more time to the telecom company to repay liabilities other than Agusted Gross Revenue is also included. A senior government official in the Telecom Ministry said that the Modi government wants to keep the condition of the telecom sector in order and take such measures that do not result in layoffs.

According to an estimate, if the business of Vodafone-Idea is closed, then in this period of economic crisis, the sword of retrenchment can be hanged on one lakh people. Bharti Airtel chairman Sunil Bharti Mittal met Telecom Minister Ravi Shankar Prasad and demanded a reduction in tax. Mittal said, "AGR has become a major crisis for the telecom industry, the government is looking for a solution." The government official said that the government is not changing the definition of AGR to help government companies like GAIL, Power Grid Corporation of India and Oil India Limited. He said that for relief on the demand notice issued by the Department of Telecommunications, they should go to the Telecom Tribunal as indicated by the Supreme Court.

Telecom officials say that the dilemma is that on the one hand, following the order of the Supreme Court, recovery from telecom companies has to be done, as well as making arrangements to keep the companies functioning. "However, our position is clear. The government does not want to allow a monopoly to take place in the telecom sector in the country," said an official. Apart from AGR, there is an option to defer the payment of arrears." Telecom companies have started paying as per the court order, so the Modi government is thinking about taking legal advice from the Solicitor General on whether to redeem the bank guarantee.

Vodafone Idea has paid 3500 crores till now. The company estimates that it owes only about 23000 crores, of which 7000 crore is the principal amount.

Bharti Airtel has paid Rs 10,000 crore so far and has said that it will repay the arrears that are being made according to the self-assessment by March 17.

In the past several quarters, any attempt by the government to bail out the telecom company Vodafone Idea (VIL), which is facing a financial crisis due to heavy losses and AGR dues, will not be enough. However much the government may help Vodafone Idea, it will not be able to compete with Reliance Jio and Bharti Airtel in the market. Vodafone-Idea owes statutory due of Rs 53,000 crore to AGR, which was to be repaid by the Supreme Court on 23 January to the Department of Telecommunications. But the company has filed a petition in the court to extend this time limit, due to which the matter is stuck. At the same time, the government has also said that without its orders, no circle will take steps against the company.

Deutsche Bank said in a release, "If the central government provides immediate assistance to the Vodafone Idea to overcome the crisis, it will prove to be a costly deal for the government." The German investor bank said, "VIL's co-promoter Aditya Birla Group may consider moving Vodafone Idea to Bankruptcy so that it can buy back a stake in the business."

He said that the laws and regulations of the telecom sector in India are not clear. The central government is trying to prevent the promoters from buying the assets of their bankrupt company so that they cannot take advantage of the loopholes present in the law. Vodafone Idea owes statutory due of Rs 53,000 crore towards AGR (Adjusted Gross Revenue) and the company's chairman Kumar Mangalam Birla has already said that the company would be shut down if the government or the court did not give relief.

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