Vodafone Idea threatens bankruptcy if court refuses payment relief

Vodafone idea map.jpg

India’s Vodafone Idea missed its payment to the government of 530.4 million rupees ($7.46 million) that was due yesterday.

The company, jointly owned by the Vodafone group and India’s Birla group, is talking to banks about emergency funding, but it has said it will close down if it can’t find a solution.

Indian operators – not just Vodafone Idea – face making huge payments to the government after the Department of Telecommunications changed the definition of adjusted gross revenue (AGR) it uses to calculate licence fees, spectrum usage charges, and other payments including penalties and interest.

Vodafone Idea has asked the supreme court of India to modify last week’s decision that they must pay up. It has said it will await the court’s determination before making any payment.

The company told the supreme court that it will be compelled to file for bankruptcy if there is no relief of the dues.

An unnamed source has told the Times of India: “The company is talking to investors to raise external financing, given that both Vodafone and Birla group are unlikely to pump in more money.”

Vodafone Idea owes 1.2 trillion rupees ($16.8 billion). “If Vodafone Idea were to fail, it would send a terrible message to global investors,” one banker told the Times of India, on condition of anonymity.