Birla's SOS falls on deaf ears, PMO unmoved

Vodafone Idea Chairman Kumar Mangalam Birla has met officials in the Prime Minister’s Office (PMO) to negotiate a deferral of payment of Rs 9,500 crore to the government by way of spectrum charges this year, government officials told ET.Officials, however, said any company-specific relief would be difficult, and pointed out that the telecom industry itself is divided over the need for any financial relief, with latest entrant Reliance Jio not being in sync with market leader Vodafone Idea and Bharti Airtel’s call for relief.“Birla met with senior officials at the PMO to discuss the possibility of some sort of respite for the company,” a senior government official told ET. “Vodafone Idea has to pay about Rs 3,500 crore in March and another Rs 6,000 later as spectrum payments.”Vodafone Idea did not respond to ET’s queries as of press time Monday. Nick Read, CEO of British telecom major Vodafone Group, which co-owns Vodafone Idea, also had met telecom department (DoT) secretary Aruna Sundararajan recently to seek relief in spectrum payments. Industry body Cellular Operators Association of India (COAI) on Monday wrote to telecom minister Manoj Sinha, urging that the Rs 35,000 crore input tax credit due to telcos from the government be adjusted against spectrum payments and levies as a measure to help carriers overcome financial distress. But, the letter added that Jio has a dissenting view on the matter and would make a separate representation. “We can certainly consider taking some steps if the entire sector is in distress, but if other players do not agree with Vodafone’s plea, then we can't just change rules for one company,” said the government official.Vodafone Idea is in the middle of a financial crisis due to falling revenues and huge losses. The company posted a consolidated loss of Rs 4,973 crore for the quarter ended September, and is expected to report loss of some Rs 4,500 crore in the October-December quarter. The company will announce its December quarter results on February 6.COAI in its letter said the telecom industry is reeling under financial distress, highlighting that quarterly revenues of the sector slumped 32% in April-June 2018 compared with the same period in 2016. “Since the industry revenues have declined substantially, the output GST on revenue is unable to absorb input GST credits available.Such a situation has led to blocking of approximately Rs 35,000 crore of operators' capital in the form of excess GST credits,” it said. “Utilise the excess GST credit as payment towards the telecom operator’s liability towards spectrum auction and licence fee/SUC.”The industry body also urged the government to exempt all regulatory levies such as licence fee, and facilitate “spectrum repayment from payment of GST under reverse charge mechanism going forward as this would ensure that further accumulation of credit on this account would cease”. While the industry has made investments to the tune of Rs 10.4 lakh crore over the years, industry financials have been adversely hurt by factors beyond the control of the operators, COAI said.

from Economic Times http://bit.ly/2BkO3hY