Vodafone Idea Says Unable to Pay $3.5 Billion to the Government
(Bloomberg) -- Vodafone Idea Ltd., the Indian mobile carrier ordered by the nation’s top court to pay $4 billion, told the government that it’s unable to pay the full amount and instead sought urgent state support to survive the crisis.
In a letter, a copy of which was obtained by Bloomberg News, the beleaguered company said in the light of mounting losses, it doesn’t have the “financial strength” to settle the dues. The firm deposited 35 billion rupees ($488 million) with the government recently.
Representatives for the company declined to comment on the letter. A telecom ministry spokesman didn’t answer calls to his cellphone.
The wireless operator, formed by the merger of Vodafone Group Plc’s local unit and billionaire Kumar Mangalam Birla’s Idea Cellular Ltd., hasn’t reported a quarterly profit since announcing the deal in 2017. With its debt at more than $14 billion, Birla warned in December that the company risks collapse if the government doesn’t step in with relief measures.
|For more on India’s telecom troubles:|
|Default Fear Pushes India Funds to Ring-Fence Vodafone Idea Debt|
|Vodafone India Unit Faces Collapse on $4 Billion Fee Ruling|
|Vodafone’s India Unit Chairman Says End is Near If No Support|
|Pushed to Brink, What Next? Vodafone Idea’s Options Dwindle|
In the letter dated Feb. 25, the mobile carrier suggested some steps the government could take to ensure a sustainable future for the industry:
- Set off GST credits due from the government worth 80 billion rupees against part of the payments
- Stagger the payment of the remaining amount over 15 years at a simple interest rate of 6%, following a three-year moratorium
- Freeze the amount payable so there are no recurring claims of interest, penalty and interest on penalty
- Reduce certain license fees
- Implement a minimum price for calls and data so competitors don’t undercut each other
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