Vodafone Idea Ltd – struggling to clear AGR dues of greater than Rs 50,000 crore – misplaced over Rs 2,700 crore in market cap on Tuesday after a letter by Chairman Kumar Mangalam Birla – written in June to Cabinet Secretary Rajiv Gauba – was made public.
Here are the highest 10 factors on this large story:
VIL owes Rs 50,399.63 crore in AGR; it has already paid Rs 7,854.37 crore. After right now’s crash remaining dues are greater than double the prevailing market cap of Rs 21,264 crore. Further, as of March 31, 2021, gross debt, excluding lease liabilities and AGR dues, is Rs 1,80,310 crore. This consists of Rs 96,270 crore in deferred spectrum fee obligations and Rs 23,080 crore in debt to banks and monetary establishments.
In his June letter Mr Birla had warned of a “looming crisis” and provided to switch his 27.66% stake within the debt-laden telecom main to “any public sector/government/domestic financial entity, or any other the government may consider worthy, – to keep (VIL) going”.
The Aditya Birla Group Chairman stated VIL’s monetary situation had “sharply deteriorated” regardless of “every possible effort to improve operational efficiency” and that Rs 25,000 crore was required to “sustain VIL operations and pay regulatory/governmental dues”.
“… without immediate support from the government… by July 2021… VIL’s financial situation will (reach) an irretrievable point,” he wrote in June, including that his provide to switch possession was pushed by a (*10*).
Mr Birla stated potential (non-Chinese) traders “want to see clear government intent to have a three-player telecom market… through positive actions on long-standing requests, such as clarity on AGR liability, adequate moratorium on spectrum payments and, most importantly, a floor pricing regime above the cost of service”. Without this traders are displaying “understandable hesitation”, he stated.
There have been no speedy feedback from both VIL or any of the opposite involved events, together with the federal government. It can also be unclear if there was communication between the federal government and VIL following the submission of this letter.
Faced with a letter warning of “immediate” hazard VIL shares tanked right now, crashing 12 per cent to a 52-week low earlier than recovering barely. This on a day the Sensex and Nifty soared to document highs, buoyed by hopes of quicker tempo of financial restoration as varied macro-economic indicators pointed in direction of demand revival within the economic system.
Last month the Supreme Court dismissed functions filed by the telecom majors, together with VIL, in January, in search of recalculation of AGR citing “mathematical errors” in calculation of the AGR dues. In September final yr the courtroom stated the dues could possibly be paid over a 10-year interval however added that 10 per cent needed to be paid by March 2021.
Telecom majors Vodafone, Bharti Airtel and Reliance Jio have been locked in two-decade previous revenue-sharing dispute with the federal government that centres on AGR, or adjusted gross income. The authorities desires income from non-core companies to be included in license charges, however the firms say such income must be excluded.
In December 2019, Mr Birla had warned that Vodafone can be compelled to close down if the federal government didn’t present reduction on AGR and different liabilities. “If we we are not getting anything I think it is end of story for Vodafone Idea,” he had stated.
With enter from PTI
(THIS STORY HAS NOT BEEN EDITED BY INDIA07 TEAM AND IS AUTO-GENERATED FROM A SYNDICATED FEED.)