Out-Of-Court Settlement Can Harm Airtel, Vi

Bharti Airtel and Vodafone Idea have over Rs 42,000 crore stuck in litigation against the government. The out-of-court settlement can reduce this amount enormously and dent the balance sheets of the two telecom giants, as per media reports. 

Vi alone has Rs 22,000 crore stuck out of the total of Rs 42,000 crore.  Out of this Rs 22,000 crore, Rs 15,000 crore has been demanded from Vi by the Department of Telecom as a one-time spectrum charge.

Also, Rs 2,000 crore from Vi and Rs 1,050 crore from Airtel have been demanded for not giving Reliance Jio with the points of interconnection in 2016. Airtel, however, has said that it will not accept the demand and challenge it in the court of law.  

The government, on various occasions, has said that it wants to reduce the litigation in the telecom sector. This is similar to the ‘Vivaad se Vishwas’ mechanism introduced by the government in March 2020. It was intended to reduce income tax-related litigation and timely settlement of the charges.

To help the ailing Telecom Sector, the government announced the New Telecom Policy on 15th September 2021. The telcos were given an option to convert the dues into government equity.