Debt-laden telecom operator Vodafone Idea is on the brink of bankruptcy as it struggles to clear Adjusted Gross Revenue (AGR) dues. The Supreme Court last week came down hard on the telecom companies for failing to clear dues.

Vodafone Idea Ltd, a joint venture between Vodafone Group Plc and India's Idea Cellular, has been worst affected by the Supreme Court's order asking telcos to clear their AGR dues. It has to pay the biggest share of dues among all three telecom companies asked to pay a total amount of Rs 1.47 lakh crore to the government.

The mobile carrier's total liability is estimated to be around Rs 53,038 crore including Rs 24,729 crore in spectrum dues and Rs 28,309 crore in licence fees.

Besides AGR dues, Vodafone Idea's gross debt, excluding lease liabilities, was Rs 1,15,850 crore as on December 31, 2019, including deferred spectrum payment obligations of Rs 88,530 crore due to the government.

A couple of days ago the telecom company said it is "assessing" the amount that can be paid towards AGR dues, but indicated that continuation of its business would depend on whether the timeline for clearing dues can be extended.

The company clearly mentioned that the continuation of its business in India will depend on "favourable order" on its modification plea filed before the top court.

"As disclosed in the company's financial statements for the quarter ending December 31, 2019, the company's ability to continue as a going the concern is essentially dependent on a positive outcome of the application for modification of the Supplementary Order," the company said in the stock exchange filing.

On Monday, the company made a part payment of Rs 2,500 crore towards AGR dues and committed to paying another Rs 1,000 crore before the end of the week.

No relief

After the payment, senior advocate Mukul Rohatgi, appearing on behalf of Vodafone Idea, urged the top court not to take any coercive action against the telecom operator after the initial payment was made yesterday. However, the Supreme Court rejected the plea and made room for the Department of Telecommunication (DoT) to take coercive action including encashment of the bank guarantees.

A financial bank guarantee is equal to two quarters of licence fee and other dues. This amount could be in the range of Rs 5,000 crore for Airtel and Vodafone Idea.

The Supreme Court last week rejected a plea by mobile carriers such as Bharti Airtel and Vodafone Idea Ltd for extension in the payment schedule and asked them to deposit an estimated Rs 1.47 lakh crore in past dues for spectrum and licences.

It also threatened to initiate contempt proceedings against top executives of these firms for non-payment. Of the estimated dues that include interest and penalty for late payments, Airtel and Vodafone Idea owe about 60 per cent.

While Airtel has paid Rs 10,000 crore of its Rs 35,586 crore dues, it has promised to clear all its dues before the next date of hearing in the case on March 17. However, Vodafone Idea has so far not provided any concrete deadline for further payments.

In a scenario where Vodafone Idea faces insolvency, India will be left with just two telecom providers-Airtel and Reliance Jio.

These mobile carriers are expected to benefit in the long run by absorbing customers of Vodafone Idea, but its bankruptcy could have a greater negative impact on the Indian economy.

(With inputs from PTI)