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‘Vodafone will shut shop without government relief,’ says Kumar Mangalam Birla

Aditya Birla Group chairman Kumar Mangalam Birla said that Vodafone Idea, the group’s telecom unit, will have to “shut shop” if the company doesn’t receive relief on the payment of the Adjusted Gross Revenue (AGR) dues from the government. “I think it is the end of story for Vodafone Idea,” Birla said, if “we are not getting anything [relief from the government]”. Birla made his remarks at the Hindustan Time Leadership Summit on December 7.

The Supreme Court, in October, had ordered telecom companies to include non-core income for calculation of AGR, and asked them to pay Rs 92,640 crores to the Centre, which includes disputed demand, interest, and penalty. The Cellular Operators Association of India (COAI) has since then urged the Department of Telecommunications for relief.

Calling the AGR judgement the “elephant in the room”, Birla said that since the government had “won” against the telecom service providers, it should try and “try to find some solution” for it. He said that the telecom sector is a critical sector since the whole Digital India programme rests on it. He added that more stimulus from the government should be expected because it is required for the sector to survive. He also said that bringing the GST on the telecom sector down to 15% would be a “huge stimulus”.

Birla’s comments come after Vodafone Group’s Nick Read had reportedly said that the condition of Vodafone Idea is critical and if the sector doesn’t get certain remedies, the company might potentially be looking at a liquidation scenario. Read later apologised to the Indian government, stating that this remarks were reported in a “distorted” manner, and that the company very much wanted to operate in India. It has also said that it will not inject further group equity in Vodafone Idea.

Vodafone Idea posted a staggering loss of Rs 50,897 crore for Q2FY20, which is the biggest quarterly loss in India’s corporate history. At the time of announcing its earnings for the September quarter, the company’s MD and CEO Ravinder Takkar had said that it would be “very, very helpful” if the government allowed the company a generous payment plan, spread over a large period of time to pay AGR dues.

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