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Friday, December 04, 2020

Kumar Mangalam Birla urges Centre for AGR relief, else ‘Vodafone Idea will have to shut shop’

Shares of the Vodafone Idea slipped as much as 9 per cent intra-day on the National Stock Exchange, following Birla’s comments and closed the day’s trade nearly 6 per cent lower than the previous day’s end at Rs 6.90. 

By: ENS Economic Bureau | New Delhi | Updated: December 7, 2019 8:26:36 am
kumar mangalam birla, agr relief, vodafone idea, ministry of communications, ravi shankar prasad, telecom, business news, indian express File photo of Kumar Mangalam Birla at a Press Conference in Mumbai. (Express Photo by Amit Chakravarty)

Vodafone Idea chairman Kumar Mangalam Birla on Friday said that Vodafone Idea “will have to shut shop” if the government does not provide relief from payment of Adjusted Gross Revenue (AGR) following the Supreme Court’s judgment. “I think that we can expect much more stimulus from the government because it’s required for the sector to survive. If we were not getting anything then I think it is the end of story for Vodafone Idea,” said Birla, speaking at the HT Leadership Summit 2019 here.

Though there was no official response, sources in the Ministry of Communications said that the government’s stand on the issue remains unchanged, and that there was nothing it could do since it was a judgment from the apex court.
Union Communications Minister Ravi Shankar Prasad had last week told Parliament that the government had no plans to waive dues of telecom companies, following the AGR judgment.

Birla, who also serves as chairman of the Aditya Birla Group, added that “it does not make sense to put good money after bad”.

Shares of the Vodafone Idea slipped as much as 9 per cent intra-day on the National Stock Exchange, following Birla’s comments and closed the day’s trade nearly 6 per cent lower than the previous day’s end at Rs 6.90.  Aditya Birla Group’s Idea Cellular had joined hands with rival telecommunications firm Vodafone last year to compete with the onslaught of cheap data and call being offered by rival Reliance Jio Infocomm.

The combined entity of Vodafone Idea, in which Aditya Birla Group has 26 per cent stake, owes the government closed to Rs 53,000 crore in AGR dues, which it has to pay by January. The telco had recently posted a record loss of Rs 50,921 crore in the second quarter of the fiscal, citing the provisioning it had made for payment of AGR dues.

Birla’s comments come nearly a fortnight after the global chief executive officer of Vodafone Nick Read made similar comments. Read had, on November 12, said that Vodafone’s future in India was doubtful and the company could be headed for liquidation if there was no relief from the payment of AGR dues.

He had also said that the global telecom firm would not commit any more equity for India as the country “effectively contributed zero value to the company’s share price”. A day later, however, Read sent a letter to Prasad and said that his comments had been taken out of context by the media.

“I apologise for the impression that this coverage conveys. However, I wish to put on record that this does not reflect our version. You have my words that Vodafone wishes to continue its long history in India, given the right conditions, and we strongly believe in the potential of the country — its telecom sector and transformative potential for its citizens. We are closely aligned with the ‘Digital India’ vision” Read had written in his letter, adding that the company was in talks with the government on the issue.

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