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Govt working on AGR relief package to stop Vodafone's exit from Indian telecom space

New Delhi: Just a few days after Vodafone Global Chief Executive Officer Nick Read met Union Finance Minister Nirmala Sitharaman and Union Telecom Minister Ravi Shankar Prasad on Friday last week, the Government of India is learned to be silently working on a relief package for Vodafone Idea India, including lower interest on scheduled payments and equated installments—or a mix thereof—to try and ensure that the option of an exit from the Indian market by Vodafone Plc is put off, for now.

In a show of silent subjugation, Read, whose company partnered with the erstwhile Idea Cellular Ltd in India, accepted during the Friday meeting that the joint entity could have better managed its anticipation of Adjusted Gross Revenues (AGR) demands from the Indian Government, which are close to Rs 50,000 crore. Aditya Birla Group chief Kumar Mangalam Birla has also gone on record repeatedly over the last few months, claiming that without any relief from the authorities or the Hon'ble Supreme Court, Vodafone Idea would have no option but to shut down its operations in India.

As stated, the Union of India, over the last few months, has been demanding around Rs 50,000 in AGR dues from Vodafone Idea Ltd. Total AGR outstandings from all Indian entities, including other telecom operators like Bharti Airtel, Reliance Communications and Tata Teleservices Ltd, are over Rs 147,000 crore.

In a statement issued to the National Stock Exchange of India on 6 March 2020, Vodafone Idea Ltd said: "The Company today filed its self-assessment of the AGR liabilities with the Department of Telecommunications. The self-assessment discloses the Company's AGR liabilities to aggregate Rs 21,533 crore, including a principal amount of Rs 6,854 crore for the period from FY 2006-07 to FY 2018-19 and interest up to February 2020."

What remains unstated is how Vodafone Idea Ltd will cope with its quarterly operating losses over the last few quarters since the merger, which is bordering on near Rs 5,000 crore each time. AGR apart, the times are grim for the Company, something which does not bode well for India's still-surviving telecom sector. Also, in its books, the Company has not provisioned for these AGR payments, and investors may be just be left holding a candle.

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