The Supreme Court of India has refused to grant the time extension for the telecom companies so that they can pay billions of dollars in India in additional revenues to the government of India. India is known as one of the largest telecoms markets in the world. But in recent years, the principal and first players have been facing a tough time. And now their tough time is getting worse as the Supreme Court of India has directed telecom companies to pay $13bn by 17 March. Supreme Court has been asking why contempt proceedings are not started against them for not coughing up the money earlier.
Earlier, Hutch is now our Vodafone is facing the worst time in the Indian market. Not only Vodafone but also the Idea is also facing the same difficult time. And at this kind of tough period, the order has come from the country’s top court. This week, Vodafone has announced a sixth straight quarterly loss of $903m. In the same period last year, it had also faced a loss of $70m. Kumar Mangalam Birla, the chairman of Vodafone, said that the company would shut down the shops if they do not get any help from the Supreme Court or the government of India.
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The present situation of the telecom market in India
Airtel, Vodafone, and Idea are in want of time extension to pay their dues. And they are already burdened with dipping tariffs and increased debt. Now the biggest question is that the deadline 17 March is coming, and there is no relief from the government of India, is this the end of these telecom companies in India? These UK-based telecom companies are the oldest and largest players in the field of India, and the shutdown will not be a good thing. Presently it has more than three hundred million subscribers, and it provides jobs for thousands. Critics are also saying that this shutdown would likely harm the whole telecom sector.
If Idea and Vodafone decide to exit, this Indian market will turn into a duopoly; Reliance Jio Infocomm and Bharti Airtel will be the only two players then. Even now Airtel is not in a good position as at the end of the last quarter it has losses of nearly $3bn and owing almost $5bn in dues to the government.
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The actual battle between telecom companies and the government of India
They are battling over Adjusted Gross Revenue (AGR) over the years rather more than a decade. According to layman’s terms, a certain proportion of earned revenues by these telecom companies need to be shared with the government telecom departments. Since 2005, the government and telecom companies had disagreed on the terms of adjusted gross revenue.
