India’s second-largest mobile service provider owes government US$4 billion and is saddled with a debt overhang of US$14 billion

India’s second-largest mobile service provider, Vodafone Idea, is at the brink of collapse, threatening a staggering blow not just to the country’s telecoms sector but also to the country’s sluggish economy.
What was once a high-flying operator, the joint venture between the UK’s Vodafone Group and India’s Idea Cellular was brought to its knees when India’s Supreme Court ruled in October that the company owed the government billions of dollars in usage charges and licence fees. The court gave Vodafone Idea 90 days to pay, with the deadline later extended to March 17.
Following a period of intense negotiations, the financially stressed telecoms operator sent a letter to the government on Wednesday seeking a series of relief measures including deferred and reduced payments of its overdue levies.
Vodafone Idea’s 300 million subscribers remain on tenterhooks waiting to see if the company can weather the storm. It has lost over 100 million customers since 2016, and more than 36 million subscribers switched from Vodafone Idea in November alone.
Vodafone Idea owes US$4 billion to the government in additional revenues, on top of an overall debt of US$14 billion accumulated through short-sighted strategies, a bleeding balance sheet and continuing operational losses – making it one of India’s most indebted companies.
The Digital Communications Commission – the highest decision-making body under India’s Ministry of Communications – held a crisis meeting on Friday, where top government officials were expected to discuss how to resolve the situation, but the meeting ended with no credible outcome.