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British Telecom Giant Vodafone Faces Vendor Payment Issues in India

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New Delhi (Sputnik): Last November, Vodafone's global CEO Nick Read said the company's future in India was doubtful. Though Read immediately retracted it, weeks later its Indian partner and chairman of Vodafone Idea said the company may have to shut shop. The Indian government dragged telecom firms to court last year demanding statutory dues.

Vodafone Idea – a telecom joint venture between Britain's Vodafone PLc and India's Idea cellular is facing monetary constraints in making payment to its vendors like telecom tower service providers. The company is reportedly in talks with the vendors and is in the process of ironing out the issue with them. 

Sources close to the development said the company is facing "capital constraints" due to which it is finding it difficult to make payments to the vendors. The firm's vendors such as tower operators and others have not been paid for June, according to the sources. 

It is believed the company is in talks with the vendors to solve the problem and has offered to pay the pending amount for June and July in August.

In its quarterly results for January-March 2020, Vodafone Idea reported a net loss of $1.6 billion. This is more than double the net loss of $656.93 million reported by the company in January to March 2019. 

Vodafone Idea, along with other telecom firms, is facing a legal battle with the Indian government on payment of overall statutory dues worth $20 billion.

Vodafone Idea has paid $853 million of its $6.8 billion in dues. Other major Indian telecom player, Bharti Airtel, has paid almost half of the $4.6 billion it owes to the government.

In a recent hearing on the matter pertaining to statutory dues in the country's apex court, the Supreme Court of India, Senior Counsel Mukul Rohatgi, appearing for Vodafone Idea, told the court, "It is an extremely precarious situation for the company and it is not in a position to give fresh bank guarantees".

"The parent company has written off investments and losses to the tune of over $13 billion. The ship is barely afloat and the only way to pay adjusted gross revenue (AGR) dues is to stagger payment for twenty years", he added. 
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