What does Vodafone Idea's demise mean for India's banking industry?

The top court has also actively convicted the telecom operator to bankruptcy and recommended if it can raise fresh capital

A case of poor strategy, but has pushed its investors to a atrocious bargaining table. Negotiations will include discussions about their future course of action about their exposure to the indebted telecom player as it endeavor to stay buoyant.

 

The company’s debt-ridden state has quite rationally investors and promoters have denied pervade cash in the telecom company, Vodafone Idea.

 

The Supreme Court has too, for rectification of alleged miscalculation in adjusted for gross (AGR) revenue dues, revenue has to be paid by the telecom company to the government, which is quite an callous situation for the telecom player.

 

The top court has also actively convicted the telecom operator to bankruptcy and recommended if it can raise fresh capital.

 

If the telecom operator goes bankrupt, it will be the government’s worst nightmare because it owes the centre a massive debt in the form of adjusted gross revenue (AGR) dues and spectrum charges.

 

The company’s potential for raising funds appear unpromising and any new strategic investor will be putting billions into the government caskets, which is a necessary fact.

 

To which, it means that the funds will be transferred to the government rather than being strategically reinvested in the telecom to prepare it for the new 5G world.

 

The chairman of the Aditya Birla Group has effectively step forward to hand over his stake in Vodafone Idea Limited (VIL) to the government or any other company for the telecom to continue to operate.

 

VIL is highly doubtful to be able to service its gross debt in light of the previous mentioned difficult circumstances. Its worth noting that the telecom giant debt that totals rupees 1.8 lakh crore.

 

As per the estimates, the telecom player owes various state-owned lenders at least rupees 28,700 crore. While the official data shows that VIL had a gross revenue liability of rupees 58,254 crore and the telecom operator has paid a total of rupees 7,854 crore.

India Scanner News Network

Leave a comment