After the Supreme Court judgement, which widened the definition of Adjusted Gross Revenue, Vodafone Idea has to pay an approximate amount of Rs 40,000 crores to the government. This amount includes spectrum usage charges, past license fees and interest and penalties on the due amount.
This amount came as an extra burden to the telecom company which was already under a debt of Rs 1.02 crore by September end this year. The top managers of Vodafone Idea have informed their lenders that if the government does not provide them with an urgent relief on the amount of debt, they will not be able to make timely repayment to the lenders.
Apart from expecting support from the government, Vodafone Idea Managing director has said that the telecom company is looking forward to sell their data centers and optic fiber network for raising funds.
Relief from Government to Vodafone idea
The telecom company is expecting from the government waiver of interest and penalty amount and the extra Adjusted Gross Revenue dues and lowering the taxes and levies with a benefit to suspend the spectrum payment.
Additionally, the company is expecting a positive response in the Curative Petition that is filed to review the Supreme Court ruling that came on October 24, 2019.
Will the Vodafone Idea assets be written-off?
If the government will not provide relief to the company, then the company is just a few months away when their auditors will take the final call and decide whether the telecom firm’s intangible assets such as goodwill should be written off.
The company also told that their financial condition would improve in the next quarter and they are expecting a class flow in the near future. If the company will write-off the asset that it will directly affect their future process of raising funds and the Fair Market Value will only be calculated on the tangible assets and will leave the intangible assets that include goodwill, worthless.
Vodafone India, CEO of India market said that if the company does not get relief from the government, then the survival of India Joint Venture will become unmanageable and that the global telco would not be infusing any further equity into the venture.
Vodafone Idea Managing director, Takkar said that now everything is in the hand of the government as they are the winner of this case. The government can act in the overall interest of the telecom industry, consumer and the economy.
He expects a positive response from the panel that is discussing ways to provide relief to the sector and hopes that the health and position will be restored and the blocked Input Tax Credit under GST which id of Rs 7,000 crore will be released and the spectrum fee will be excused.
It is believed that if the company goes to liquidate its assets, then it would worsen the situation and lower their market reputation, as who will enter into any financial transaction will a debt-ridden company.
