Tweaking of SC order unlikely: DOT

Even as telecom firms slug it out; buzz about Vodafone’s exit

The Department of Telecom has apprised the Cabinet Secretary and Prime Minister's Office of the Supreme Court order on the AGR, under which the telecom companies have to cough up Rs 1.33 lakh crore in dues. The DOT has discussed the impact of the SC ruling while making it clear that it was "unlikely to tinker with any aspect of the order." At the same time, it has conveyed the industry’s concerns and demand for a bailout.

The SC order has been especially hard on Airtel and Vodafone and the government has formed a panel to look into financial woes of the telecom companies after the AGR blow.

However, Telecom Minister, who also is the Law Minister, is learnt to be against any intervention in the court order.

VODAFONE EXIT: The official briefing came even as the telecom grapevine is frantically discussing whether the imperilled telecom operator, Vodafone, is ready to exit its India operations. The buzz in telecom circles is that Vodafone is ready to "pack up and leave any day now" as operating losses are mounting in the joint venture company, Vodafone-Idea; besides, there is loss of lakhs of subscribers every month and a dwindling market capitalization which is hurting any fresh fund raising.The SC ruling has been a watershed moment for Vodafone Idea, which has to fork out around Rs 28,309 crore in three months’ time. Following the sharp fall in shares, Vodafone clarified to stock exchanges on October 25 and again on Tuesday, this week, that the "SC judgement represents a significant event for the company".

Following the verdict, Vodafone-Idea stock hit a 52-week low of Rs 3.66 and was trading at Rs 3.86 on Wednesday morning. Its market capitalization is a measly Rs 11,091 crore, while the investments have been several billions of dollars.

TELECOM BICKERING: Meanwhile, the telecom sector, once a sunrise vertical and the most litigious, is witnessing the comeback of old-style bickering between key operators pitched on either side of the divide. The Cellular Operators Association of India has written a midnight letter to Telecom Minister Ravi Shankar Prasad on the impact of the Supreme Court judgement. COAI has petitioned that "in the absence of an immediate relief from the government, two of the three private mobile operators -- Airtel and Vodafone Idea, which provide services to around 63 per cent of current subscriber base -- will face an unprecedented crisis".

Following the dispatch of the letter, Reliance Jio hit back at the COAI."We are shocked that you have issued the letter, when it was clearly communicated to you that we will be providing our detailed comments by morning of 30th October 2019," Pramod Kumar Mittal of Reliance Jio has written.

Jio considers this a serious breach of trust and has alleged that the letter was sent to the Telecom Minister at the behest of two members. Although it did not take names, it is implied that the two names would be Bharti Airtel and Vodafone Idea. Interestingly, the COAI has warned the government about a possible monopoly in the telecom sector. "Such an adverse outcome will trigger a chain of events which will result in a disruption to the entire business chain. The worst outcome of this would be India ending up with a possible monopoly in the telecom sector which will have its own adverse consequences..," it said.Countering the COAI argument, Reliance Jio has said it completely disagrees with the COAI letter and it does not represent the industry view.