Voda idea crisis: The country’s third largest telecom company Vodafone Idea has sought relief from the Supreme Court against the government decision. In fact, Vodafone Idea had requested the government to waive interest and fine on the $ 9.76 billion dues, which the government has rejected. Now Vodafone Idea has appealed to the Supreme Court to instruct the government to give relief in public interest keeping in mind the sensitive telecom sector.
Government apologizes rejecting
According to news agency Reuters, the Ministry of Communications on 29 April rejected the request of Akshay Mundra’s apology of Vodafone Idea, saying the company’s existence was threatened. Therefore this request cannot be accepted.
Supreme Court order and economic pressure of 2019
In 2019, the Supreme Court gave a historic verdict on the adjustable gross revenue (AGR). This caused a major setback to the telecom companies and increased the liability of billions of dollars on them. This led to additional financial pressure of billions of dollars on several companies including Vodafone Idea. The government has changed its stake to 49% by converting some part of the company’s arrears into equity.
Penalty and heavy amount of interest
According to the company’s petition, fines and interests in dues of $ 9.76 billion are more than $ 5 billion. Bharti Airtel is also fighting in court against similar arrears, but the financial condition of Vodafone Idea is considered more weak than that.
Will Voda Idea stop?
Akshay Mundra wrote a letter to the government that if there is no relief, Vodafone Idea will not be able to continue operations after FY 2026. He said that this would make the country’s credibility a big shock and the trust of foreign investors will be shaken. According to the brokerage firm CLSA, by September 2024, Vodafone Idea had a net debt of $ 25 billion.
The condition of shares of Vodafone Idea
Vodafone Idea shares rose 1.66% to close at Rs 7.35 on Friday (May 16). The stocks have declined by 8.92% during the last 1 month. At the same time, stock has dives 45.76% in the last one year. The company’s market cap is 79.74 thousand crores.
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