After Vodafone Group chief executive Nick Read termed the current situation for their joint venture with Idea as “critical”, Aditya Birla Group is also likely heading towards insolvency if the company continues its losses.
“Financially there’s been a heavy burden through unsupportive regulation, excessive taxes and on top of that, we got the negative supreme court decision,” Read said.
The company has to pay AGR worth Rs 39,000 crore after the Supreme Court order of October 24 which upheld the Department of Telecommunications’ (DoT) definition of the fee calculation. It includes Rs 28,000 crore towards additional license fee and Rs 11,000 crore towards spectrum usage.
Economic Times quoted a group executive as saying that the Aditya Birla would rethink their capital allocation as the telecom business “seems to be making money for everyone else except the players”.
The company has lost nearly Rs 5,000 crore in a quarter and “the government has stated its desire not to end up with a monopoly, ”Read said. Echoing the same, the Birla source added that its a difficult business environment.
However, CNBC claimed that Vodafone CEO apologized via a letter to the Union Minister Ravi Shankar Prasad after the minister expressed his displeasure to Kumar Mangalam Birla about Vodafone CEO’s comments. Reportedly Nick Read said that he has been quoted out of context and he appreciates steps being taken by Indian government.
No official comments have yet been made by the company post Read’s comments.