Vodafone Idea unlikely to file for bankruptcy: Report

The company, which has been putting up a brave face, has acknowledged that its fate is now in the hands of the government. An internal communication sent by Vi’s Managing Director Ravinder Takkar to 9,500 employees said the firm would continue to receive “support and guidance” from him and ABG even after the resignation of Kumar Mangalam Birla. It added that the employees should continue to focus on customers and winning in the market. The internal communication was seen by The Economic Times.

Government officials told the business daily that the Centre cannot accept Vi’s proposal but is in the process of announcing a relief package for the telecom sector. The benefits may help Vi too.

The relief package for the telcos may include surrendering of the spectrum, reduction of bank guarantees, phasing out or reducing levies such as license fees and spectrum usage charges and prospectively redefining adjusted gross revenue (AGR) to exclude non-telecom items.

Vi is facing a shortfall of Rs 23,500 crore in cash flows with its March-end cash balance at Rs 350 crore. The company has been looking to raise funds of up to Rs 25,000 crore for the past 10 months but in vain.

Vi’s woes started after the Supreme Court ruling in September 2019 to widen the definition of AGR to include non-telecom items. This left Vi hanging with a statutory bill of over Rs 58,000 crore.

To make matters worse, its debt shot up to Rs 1.8 lakh crore in the January-March quarter as it borrowed to buy spectrum and invest in its network. Vi, a merger between Aditya Birla’s Idea Cellular and Vodafone, has never reported a quarterly profit since its merger.