The consequences of Vodafone Idea Limited going bust

Vodafone Idea Limited’s demise won't just hurt its promoters. The government, banks, customers, and even its rivals would also bear the brunt of India’s second largest telco going belly-up

In October, the telecom industry was left reeling after the Supreme Court ruled that telcos owed the govt a combined Rs 1,31,000 crore

Already loss-making, Vodafone Idea posted a Rs 50,922 crore quarterly loss—India’s largest ever—as it provisioned funds for repayment

The struggling telco has sought govt intervention to remain in business, but it is unclear whether any relief will be provided

If Vodafone Idea tanks, not only must the government forego what it is owed, but it will leave India’s telecom sector a shaky duopoly

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.

AUTHOR

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.

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