Every one of India’s biggest billionaires is dealing with the telecom crisis differently

• Vodafone Idea is left with no choice but to proceed for insolvency as the JV landed with the accumulated cumulative bill of ₹53,000 crore.
  
• Tata Sons might either borrow or are known to either borrow or sell stakes in a business to pay it off.
  
• Anil Ambani’s RCom was already in bankruptcy struggling to find buyers for its spectrum, fibre and other assets.
  

When the government opened the telecom sector to private players, every big business house of the country rushed to invest in it. But now, right from Ambanis to Tatas and Birlas — everyone is paying the price for the many shocks this sector has posed.

It is yet to be seen if the sector which stood through two rounds of tariff war, will be able to survive the reparations sought by telecom department as spectrum dues.

Birlas and the curse of Vodafone


When Kumar Mangalam Birla— the tenth richest man in the country who is worth $9.7 billion— decided to merge his Idea Cellular with Vodafone India, he was hoping to create a stronger entity. Little did he know that it would mean merging liabilities — especially after SC backed telecom department’s definition of aggregate gross revenues. They landed with the accumulated cumulative bill of ₹53,000 crore.

After seeking government relief, and pleading the courts to not take ‘coercive action’ on non-payment, Birla has ended speculation that Vodafone Idea would go under and decided to pay up. “The Company is currently assessing the amount that it will be able to pay to DoT towards the dues calculated based on AGR as interpreted by the Hon'ble Supreme Court. The Company proposes to pay the amount so assessed in the next few days,” Vodafone Idea said in a press release.

Birla who had earlier said that there is no point in good money following ‘bad’ money — had a lot more to lose if Vodafone goes under The group’s credit rating will be affected if Vodafone is liquidated, Sandeep Parekh, a lawyer at Finsec Law Advisors said in a TV interview. And, it will have a bearing on the Birla group’s corporate guarantees will make in the future.

The conglomerate with interest in businesses ranging from cement to mining and a 147-year history might not be able to afford such a dent.


Tatas to borrow or sell take to pay dues

The ghost of Tata Docomo is back to haunt the Tatas. The company which started the first telecom tariff war in India had to sign a multi-billion dollar cheque to Japanese telecom major DoCoMo in 2017, as the business closed down. The predatory discounts and the slow uptake had made the group liable to their Japanese partner.

After the AGR dues case, the legacy claims of losses have only extended. They have been sent a bill of ₹13,823 crore, and Tata Sons might either borrow or sell stakes in a business to pay it off, according to Economic Times.

Telecom business and its failure was one of the main points that former chairman of Tata group, Cyrus Mistry pointed out as its many fallacies. Years before the cheque to DoCoMo was signed, Mistry had predicted that Docomo's telecom venture would leave a massive hole in Tata’s business. He said the cost of exiting the business would be $4-6 billion.

Even Mistry could not have predicted the ‘extras’ (like the bill it is faced with right now) they would have to keep on paying after exiting the business.

The double dues of Ambani-led RCom

Anil Ambani’s problems with the telecom business started long before SC judgement. In fact, it was already in bankruptcy struggling to find buyers for its spectrum, fibre and other assets. Even after the sale, the creditors who are owed ₹49,000 crore will only receive a quarter of what they are owed. Since Government’s claim came much after, it might not receive any.

But, no one is vindicated in the case. If the spectrum dues are added to the liabilities, they might have a bearing on the sale which has received ₹25,000 crore bids from Reliance Jio and UV Asset Reconstruction Company (UVARC). In addition to this, the business of telecom itself left the younger Ambani in all sorts of troubles - one of them being a court case in the UK.

A UK High Court asked Anil Ambani, the chairman of Reliance Communication to pay $100 million within six weeks. This comes a week after Ambani declared his net worth zero.

Three Chinese banks — Industrial and Commercial Bank of China (ICBC), China Development Bank and the Export-Import Bank of China — sued Anil Ambani for defaulting on a loan that was given to Reliance Communications. According to the banks, Mukesh Ambani’s younger brother owes them over ₹5000 crore (about $700 million).

See also:
India's Supreme Court threatened Airtel and Vodafone with 'contempt' proceedings⁠
Airtel and Vodafone-Idea get a devastating blow from India's Supreme Court