Banks Call On Government To Ease Pressure On Vodafone Idea

A joint venture between Vodafone and the Birla Group’s Idea Cellular was ordered to pay over $8 billion to the government to settle long-standing dues. Vodafone’s stake in the company is about 44 percent and Aditya Birla’s is about 27 percent.

State Bank of India (SBI)-led banks have asked the government to give more time to debt-ridden Vodafone Idea (VODA.NS) to clear its tax dues and spectrum charges. Two bankers and a government official associated with this matter have given this information.

Vodafone Idea

Vodafone and Idea’s share holding

An Indian court last year granted over $8 billion to the government to settle long-standing dues to a joint venture between the Indian arm of Britain’s Vodafone Group (Vodafone) and Aditya Birla Group’s Idea Cellular. was ordered to pay. Vodafone holds around 44 percent stake in the company and Aditya Birla has around 27 percent.

In June, Vodafone Idea’s then non-executive chairman Kumar Mangalam Birla said that without the government, the Indian mobile company’s “financial situation will worsen. Vodafone Idea’s gross debt as of June 30 was Rs 1.9 trillion, of which Rs 1.06 trillion”. deferred spectrum payment obligations of Rs.621.8 billion and adjusted gross revenue liability of Rs.621.8 billion.

The mobile operator also reported that it owed 234 billion Indian rupees ($3.18 billion) to financial institutions. Senior officials of SBI (SBI.NS) and representatives of the Indian Banks’ Association (IBA) met officials of the Finance and Telecom Departments this month and proposed immediate relief on repayment of spectrum dues, two bankers, and a government official said.

Vodafone Idea

SBI, IBA, and the Department of Finance and Telecom declined to comment. A banker said the company is facing repayments of Rs 5-10 billion of non-convertible debentures around January.

In June, Kumar Mangalam Birla, the then non-executive chairman at Vodafone Idea, warned that the Indian mobile operator’s financial condition would get worsen if the government will not provide relief.

As of June 30, the debt-ridden Vodafone Idea’s gross debt was Rs 1.9 trillion, which includes deferred spectrum payment obligations of 1.06 trillion rupees and an adjusted gross revenue liability of 621.8 billion rupees, the company’s latest stock exchange filing in June showed.

Vodafone Idea’s gross debt as of June 30 was 1.9 trillion rupees, comprising of deferred spectrum payment obligations of 1.06 trillion rupees and an adjusted gross revenue liability of 621.8 billion rupees, its latest stock exchange filing in June showed.

Vodafone Idea

The adjusted gross revenue is the usage and licensing fee that telecom operators are charged by the Indian government. The mobile operator also reported that it owes 234 billion Indian rupees ($3.18 billion) to financial institutions.

Vodafone Idea declined to comment on the issue. Vodafone Group did not immediately respond to an email request. A spokesperson for the Aditya Birla Group declined to comment either way.

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Lingraj Sahu
Lingraj is one of the youngest members of PhoneTalk, and a recent tech geek convert. When he's not churning out articles, you’ll find him watching sports, exploring new places, and listening to music.