Articles
Vodafone – Idea - Moratorium
Dt: 8/1/26
Vodafone – Idea - Moratorium
Dr T. H. Chowdary*
“Take my stake and save Vodafone-Idea” , wrote Sri Kumara Mangalam Birla, the eminent Indian promotor of Vodafone-Idea to the Cabinet Secretary of the GOI on June 7, 2021. Subsequently on Aug 2, 2021 he resigned as Chairman and Managing Director of the company too. What else could he do or anyone else do in the plight of the company on the brink of default for massive amounts due to government by March 2, 2022 with cash balance of only a few hundred crores; no bank or financial institution was willing to lend and millions of subscribers shifting to rivals mainly to RJio.
2. The DOT/ GOI converted of what it was claiming as dues in default , as equity in the company in two installments - Feb 2023 to 33.1% and April 2025 to 49%. Thus holding a little over 49% of the equity of Vodafone; now 2% more would qualify the company to be a state-owned enterprise like the Mahanagar Telephone Nigam Ltd (MTNL ) since the decades long loss-making, subscriber loosing , interest payment on debentures defaulting , govt Telco (G Telco).
3. When the company was formed by merger of Vodafone and Idea in Aug 2018, it had about 400 mln subscribers ( 35% of the total cell phones in India ) ( Vodafone 21% and Idea 14%) . In Nov 2025 it has 128 mln , 17.1% of the total cell phones in India - half of what it had when the merged company emerged .
Debt Burden: Rs. 2.17 lakh cr
Subscribers: about 200 mln ; loosing > 2 mln per month
Current ( Jan 2026) Situation: ARPU (Average revenue per use / month): Rs. 167 (RJio & AirTel >250; BSNL-164)
Recent Financial loss:
|
Loss / Qrtr ending |
Sept 24 |
March 25 |
June 25 |
Sept 25 |
|
Crores |
Rs. 7175 |
7166 |
6608 |
5524 |
|
|
Rs. 26,473 cr/yr |
|
|
|
4. No Telco in India has figured in newspapers and in the Supreme Court of India / DOT claiming dues and Vodafone Idea contesting as frequently as Vodafone Idea .-----------The latest is truce; the government agreeing for a moratorium on Rs. 87,675 cr it has been claiming from Vodafone Idea and Vodafone Idea has been contesting the Supreme Court ruling that th e GOI can take any ameliorative measures (like Vajpayi government emigrating all P-Telcos from up-front payment to revenue share).
5. The question arises whether the Vodafone Idea with a public debt of over 2 lakh crore rupees, losing about 20 lakh subscribers a month and five thousand crores of rupees per quarter with least average revenue per month among the P-Telcos, can over the next 5 years of moratorium of stem losses of about Rs. 20,000 cr per year, make a profit of Rs. 87,695 cr to pay off the debt claimed by DOT government ! Government after the moratorium period of 5 years ( 2030) can decide to write off or modify the moratorium !
6. I have been holding and still hold that the government is unethical and unreasonable and anti-business on several counts.
· Auctioning radio spectrum – Government does not generate radio spectrum used for cell telephony. Telcos themselves generate the spectrum and use it again and again by technology and engineering. How logical or ethical it is for government to sell or auction what it does not produce and own ? It can regulate its use and charge the cost of regulation, allocation and enforcement.
· Sunlight and Wind are used to produce electricity. They are not auctioned by government.
· After selling spectrum, the buyer Telco is charged for using it ( like a house is sold; but its use for living is charged) – called spectrum usage charge.
· The spectrum is inexhaustible; it can be generated and used again and again.
· The largest and the smallest country have the same equal , inexhaustible radio spectrum.
· When the Telcos make profits, they pay income tax ; why at all they should give a share of their revenue to government. Government does not share their losses.
· In view of above facts, the Telcos are treated unfairly
7. The P-Telcos RJio and Bharti AirTel exist and operate under the same conditions as Vodafone, BSNL and MTNL . While the first two get decent revenues, gain subscribers and benefit share holders, MTNL, BSNL and Vodafone Idea lose money and subscribers . It is characteristic of all businesses : some gain and prosper while some lose, wither and wind up. But government companies can have eternal life as the late Sri Vasant Sathe, Communications Minister observed:
Public sector Undertakings
Academicians have attributed several traditional strengths to the public sector .
They primarily are:
-ability to survive without profit
-state-ownership gives them immortality
-wages and high bonuses can be paid ever by continuously incurring losses
-government ownership gives full benefit of a monopoly
-Vasant Sathe, in the book
Restructuring of Public Sector in India
But cannot Sri Modi-led government be more prudent .
8. Can it not take over Vodafone-Idea; merge the lotus-eating loss-making MTNL, BSNL and Vodafone-Idea; direct the maha-merged company to pool resources, and losses say within three years and if not wind it up. Duopoly of RJio and AirTel, well-regulated cannot be harmful . USA and UK have duopoly in political parties, have duopoly in over 80% of telecom markets and numerous small telcos in the rest niche telecom services. (872 words)
END