Vodafone-Idea Might Not Survive Without DoT Support: Here's Why

Vodafone-Idea might file bankruptcy as Supreme Court rejected its pleas of reassessment of AGR dues to the Department of Telecommunication. The apex court decision is expected to spoil its efforts to raise the tariffs to clear its dues.

Analysts Views On Vodafone-Idea's Performance

In fact, analysts said that the cash-strapped Vodafone-Idea might find it difficult to survive beyond next April without any major relief package from the Government.

"Vi's survival options appear to be rapidly disappearing after today's adverse verdict in the AGR (adjusted gross revenues) case, which is likely to make its long-overdue fundraise an even more daunting affair," Mayuresh Joshi, head of equity research at the Indian unit of US equity research firm William O' Neil & Co was quoted by ET.

He said without funding Vodafone-Idea might be difficult to meet its Rs. 24,000 crores payment obligation and if it collapsed then, Reliance Jio and Airtel will remain in the sector. Notably, this comes after the Supreme Court dismissed the request of all Vodafone-Idea, Airtel, and Tata Teleservices to recalculate the adjusted gross revenue dues.

Vi Might File For Bankruptcy

"Vi may soon be bound for the bankruptcy court as its legal options for further recourse on the AGR dues front have run out, and potential global investors are likely to opt-out of any serious funding commitment after today's apex court judgment," said an analyst at a top global brokerage. However, Vi has not given any comment on the same.

For the unaware, Vodafone-Idea has to clear Rs. 1.8 lakh crores of dues along with a cash balance of Rs. 350 crores; however, it is only trying to raise to Rs. 25,000 crores from the last 10 months. But, the telecom operator missed all opportunities to raise such a big amount. The telecom operator was talking to investors like KKR, Apollo Global, and Oak Hill.

It is worth noting that adjusted gross revenue dues have been a big issue for 18 years and all telecom operators are suffering because of that as the Supreme Court has given a verdict in its favor of the Department of Telecommunication.