Get full access to one story every week, and to summaries of all other stories. Just create a free account

Kumar Mangalam Birla has been camped out in Delhi for over a week now. Birla, the chairman of beleaguered telco Vodafone Idea Limited (VIL), first rushed to the smog-filled national capital at the end of October, after a Supreme Court judgement which shook the telecom industry. The apex court ruled that telecom operators owed a combined Rs 1,31,000 crore ($18.23 billion) to the government in line with a broader definition of what constitutes taxable revenue.

Suffice to say that the already ailing VIL is now on life support. This past week, VIL posted the largest quarterly loss in the country’s history—Rs 50,922 crore ($7 billion) for the quarter ended September 2019. All of this has been enough for Nick Read, CEO of Vodafone Group, to publicly lambast India’s “unsupportive regulation and excessive taxes”, even questioning VIL’s ability to stay in business.

While Read later walked back these statements after drawing criticism from the government, Birla’s mission in Delhi makes it clear that they weren’t off the mark. Birla is seeking a stay of execution.

The VIL chairman has already met with Indian Prime Minister Narendra Modi. During his meeting with Modi, Birla apprised the PM of VIL’s precarious position and sought immediate relief from debt payments. According to sources, he was given no concrete assurances.

“He was told that the government understands the situation and that they are working on something,” said a senior industry executive aware of the meeting. A few days later the government formed a Committee of Secretaries (CoS) to look into the matter. Forming a CoS is generally seen as a response to exceptional circumstances. The last CoS was formed 20 years ago to help telcos transition from a fixed license fee regime to a revenue share one.

The SC ruling has turned the spotlight from VIL to the government. “If VIL had a few more years and months of life, the SC judgement has put the patient on a ventilator,” an international consulting firm executive said. Now, if VIL files for bankruptcy, the blame will be on the government. “It will be egg on the face of the policymakers,” said a Mumbai-based analyst. 

The measures the CoS and the government decide on will effectively determine the future course of the Indian telecom sector. And whether VIL will be part of that future or a footnote in its history. 

Even before these latest quarterly results, analysts were already speculating that VIL would end operations in telecom circles where its revenue market share is less than 15-20%. Now, there is talk about writing off intangible assets such as goodwill from its financials.

At stake is not just VIL’s fate, but also the future of the telecom market. With government-owned operators MTNL and BSNL already buried under mountains of debt, Vodafone going belly-up will result in a duopoly and a shaky one at that. 


Pratap Vikram Singh

Pratap is based out of Delhi and covers policy and myriad intersections with the other sectors, most notably technology. He has worked with Governance Now for seven years, reporting on technology, telecom policy, and the social sector.

View Full Profile

Enter your email address to read this story

To read this, you’ll need to register for a free account which will also give you access to our stories and newsletters

Or use your email ID