Vodafone And Idea May Shut Down Operations After 21st March

As the telecom companies have to pay a huge sum to the government after the Supreme Court’s ruling on AGR (Adjusted Gross Revenue) issue, Vodafone and Idea look to bow down against the debts.

Vodafone and Idea which got merged in 2018 to form Vodafone-Idea have to pay the government a sum of around 60,000 crores to the government as a part of AGR. In total telecom companies have a debt of 1.47 lakh crores to be paid to the government. Bharti Airtel owes Rs 35,600 crore while the Tata Group has to pay over 13,000 crore.

For the unknown here is What AGR means:

As per the National Telecom Policy 1999, 15 percent AGR was fixed as a license fee under the revenue-sharing model by the government. This means that apart from the telecom business other business revenue of the operating companies would be accounted for in AGR.

To put it simply let’s say if a company is a telecom service provider and also has an oil and gas business. Then in the case of AGR, it has to share the 15% of the revenue earned from both his business and not the telecom alone. This irked the telecom companies for which they went to court. Now after the Supreme Court’s go ahead government is pressurizing the companies to pay debts.

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Since Vodafone-Idea has a capital of around 12,000 crore and a debt of 1 Lakh crore from the bank taken on the back of their spectrums the company is no position to pay the debt. The government has set a 21st March as the last date for all to pay the debts. So, far the company has paid around 1500 crores out of the dues.

Idea and Vodafone
Source: India TV

Meanwhile, Airtel has also paid 10,000 crore out of its total debt. Now Vodafone-Idea is not in a condition to pay the debts and if the government didn’t give them relaxation then the following situations can most likely happen:

  • Vodafone-Idea would have to seize operation
  • Government would sell their spectrum band to recover money

Thus only two companies Airtel and Jio would be seen operating in those cases. This means that the days of free calling and free net would be over soon. For Vodafone-Idea customers it’s better to look for other options.

Inputs from SidTalk

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