From wrecker to rescuer: How DoT is trying to rejuvenate the crisis-struck Vodafone-Idea

It is a curious twist of fate that the entity that now most desperately needs to keep Vodafone-Idea afloat is the very party that brought it to its knees.

The government's department of telecommunications (DoT) had fought with the telecom operator in courts for the last 15 years over aggregated gross revenues (AGR) due to it, finally winning the case in October, but only to realise it has now been left with a near-dead golden goose.

One estimate puts the total dues by telecos at a whopping Rs 1.47 lakh crore, with Vodafone-Idea estimated to have the biggest due, as much as Rs 53,000 crore. After posting record losses in recent years—its September quarter losses were the highest ever by a company in India at Rs 50,000 crore—it is clear that the company will not be able to survive without a saviour.

Enter, the same DoT that is now left scrambling in an effort to prevent an imminent collapse. At stake is not just the telecom sector surviving as a multiplayer market, but the whole banking sector, with outstanding debts by telecom operators running into thousands of crores. More NPAs, or non-performing assets, is definitely not what Finance Minister Nirmala Sitharaman would order to rescue an already sluggish economy. Then, there is also the image of India as an investment destination itself, with Vodafone-Idea being a joint venture with the multinational giant Vodafone Group PLC.

On Tuesday, a flurry of meetings took place, from Aditya Birla group (which is the other joint-venture partner in Vodafone-Idea) honcho Kumarmangalam Birla meeting telcom secretary Anshu Prakash along with Vodafone India MD Ravinder Takkar, to Prakash himself going into a huddle with cabinet secretary Rajeev Gaba to figure out ways to sort out the mess. Also in attendance at the meeting at the Cabinet Secretariat was finance secretary Rajiv Kumar.

The situation is delicate, with the apex court last week blasting both the telecom operators for not paying up within the January-end due date as well as the government not moving to collect dues. The court was particularly incensed at a DoT licensing section directive that no adverse action be taken against telcos even if they defaulted. The court was clear – pay up within the next hearing on March 17, or face contempt of court.

Birla had said in December that he will have to shut down Vodafone-Idea if forced to pay up the full AGR dues without any respite, which is exactly what the SC ordered last week. But this also means the more than 13,000 employees of Vodafone will be left in the lurch, beside 30 crore subscribers who will have to migrate to another operator. A situation the government would rather avoid—state-operators BSNL and MTNL are in a mess, and four of the biggest loss making companies in the country last year were all telcos.

Working around the minefield that is the judiciary's ire, the options before the government are limited. AGR dues will have to be paid up, so the only option would be to ease up on other payments. Cabinet in November had already cleared a Rs 42,000 crore moratorium on payments over spectrum. Vodafone would be one of the biggest beneficiaries of this. It has internally also decided not to revoke Vodafone's bank guarantees for now. There may also be moves to release the 7,000 crore GST input credit due to the company from the exchequer.

5G auctions could also see a delay due to the present crisis gripping India's telecom sector. The only silver lining to Vodafone's dark cloud has been that the govt prop, or at least a whiff of it, sent its stocks shooting up at the Bombay Stock Exchange today by as much as 40 per cent.