Is it the end of the road for Vodafone Idea? Telco may put 4G expansion plans on hold

Vodafone Idea would have to shut shop if the telco does not get any relief from the government or the judiciary on AGR related dues, chairman Kumar Mangalam Birla had said earlier this month

Is it the end of the road for Vodafone Idea? Telco may put 4G expansion plans on hold
Representative image

Debt-laden Vodafone Idea has reportedly applied the brakes on its 4G expansion and modernisation plans to hold on to cash reserves to pay more than Rs 53,000 crore by the end of January following a Supreme Court judgment that upheld the government’s claims against the legacy telecom majors.

Vodafone Idea would have to shut shop if the telco does not get any relief from the government or the judiciary on AGR related dues, chairman Kumar Mangalam Birla had said earlier this month.

Currently, all the four telecom equipment vendors — Ericsson, Nokia, Huawei and ZTE — are worried over the recovery of their dues from the financially-troubled telco. “While existing orders are being fulfilled by the vendors, Vodafone Idea has put its new 4G expansion plans for greenfield sites on other major technology-driven investments on hold,” a person aware of the development told the Economic Times.

However, these concerns have been played down by Vodafone Idea. A company spokesperson on email told the business daily: “We are engaged with our vendor partners on business as usual basis.”

Vodafone Idea, Bharti Airtel and other telcos owe the government about Rs 1.47 lakh crore in past statutory dues, Union Telecom Minister Ravi Shankar Prasad had told Parliament last month, mentioning that there is no plan at present to waive interest and penalties on such dues.

The daily quoted Ashwinder Sethi, principal, consulting, at Analysys Mason, as saying: “Given the huge AGR dues of VIL, it is expected that they will put their (4G) expansion and new technology-driven investments on hold in the short-term and focus on nondiscretionary investments such as integrating existing networks of Vodafone and Idea.”

The report further mentioned that Vodafone Idea’s strategy to put its expansion plans on the back burner will result in losing more subscriber and revenue market share to its rivals Bharti Airtel and Reliance Jio. 

Airtel, which also faces AGR dues of over Rs 35,500 crore, has also curtailed its 4G expansion plan. The Gurugram-based telecom company declined any such move. “Airtel continues to expand its 4G and pre-5G technology footprint,” a spokesperson said told the publication.

Source : Times Now