Vodafone Idea will have to shut shop if it does not get relief from the government, the company’s Chairman Kumar Mangalam Birla said on Friday. He said his group will not invest any more money in the company if relief does not come by as that would “not be good business”.
“We will have to shut shop,” Birla told CNBC-TV18 at the Hindustan Times Leadership Summit when asked about the company’s plan if it does not get relief. Shares of Vodafone Idea dropped to an intraday low of Rs 6.66 each after his remarks, and at 1.30 pm, were down 5.2% at Rs 6.93 per share.
However, Birla added that he expects much more stimulus from the government as it was required for the telecom sector to survive. “If we weren’t getting anything, then I think that’s the end of the story,” he said.
The telecom sector has been struggling, and companies have been seeking relief from the government after an adverse Supreme Court judgement in October that upheld the Centre’s broader definition of revenue. The government calculates levies on telecom operators on the basis of this definition. In its order, the top court excluded revenue from non-core telecom operations such as rent, dividend and interest income in the reporting of financial results. The court rejected the definition of adjusted gross revenue proposed by telecom operators.
Last month, Bharti Airtel and Vodafone Idea posted huge quarterly losses because of the judgement. Vodafone Idea declared a loss of Rs 50,922 crore in the second quarter of the current financial year, while Bharti Airtel had a loss of Rs 23,045 crore. Vodafone India’s loss was the largest ever for an Indian company.