Vodafone Woes Put Govt In A Quandary

Raman Swamy

Nobody can find fault with the Supreme Court for rejecting the plea of three telecom service providers for a review of the October 24 judgment.

Nobody can have much sympathy for Vodafone Idea, Bharti Airtel and Tata Teleservices either - even though their very survival is at stake. 
 
Nobody can really blame the Modi government for refusing to show any leniency and choosing to leave it entirely up to the apex court whether or not the companies should pay up a whopping one lakh crore rupees.

At the same time nobody can avoid feeling nervous - and suspicious - about the prospect of the telecom sector becomes a monopoly of just one private sector player, Reliance Jio. 

It is that kind of a complex, face-palm situation - in which it is virtually impossible to decide whether to cheer,  jeer, laugh or cry.   The three telecom operators thought they could get away by defaulting on licence fees, spectrum usage charges, penalties and interest. They were wrong.  

On Thursday, the three-judge Bench flatly  refused to entertain a review of the earlier verdict.   The hearing was not even held in open court, but in chambers.  There was never any doubt about the outcome.  Vodafone Idea will have to cough up Rs. 53,000 crore, Bharti Airtel Rs 35,500 crore and Tata Teleservices Rs. 13,823 crore.  

There is now no escape route - except filing a desperate, last-ditch ‘curative petition’ before a five-judge Bench, a Hail Mary move that has little or no chance of changing the judicial mind.   
     
It could well spell the death knell for the companies, which are already deep in the red due to aggressive competition from Jio. Some of them may be forced to shut shop and declare bankruptcy.  So be it.  That’s life, that’s business.  If you don’t pay your dues, you die.  Ask the hundreds of poor farmers who have committed suicide because they weren’t able to repay their loans. 

Or maybe, just maybe, there could still be a faint ray of hope.  

The government may, for devious and compelling reasons of its own,  show mercy.  The deadline for payment could be extended (right now the last date is just a week away).  Or, the payment schedule could be staggered in less lethal instalments.  

Or maybe, just maybe, the government might reconsider its tough, Shylock-like stance after taking a closer look at all the disastrous consequences of three big telecom service providers collapsing and the crucial sector being reduced to a monopoly – or duopoly, with junior communications minister Shakeel Ahmed making a categorical statement in Kanpur just a day ago that the public sector BSNL would not be privatized after all. 

The list of consequences and repercussions is almost limitless.  If the three telecoms sink suddenly, who knows how many thousands or lakhs of individuals could be thrown out of employment?  With the economy already overwhelmed by and aghast at the highest unemployment figures in decades, can the Modi government afford to be responsible (even if indirectly) for adding to the number of jobless Indians? 

For that matter, can the Modi government afford to take the risk of Vodafone pulling out its investment in India – as the CEO of the parent company is reported to have held out as a distinct possibility unless Vodafone-India gets regulatory relief?  What kind of signal would a 'Vodexit' send to other foreign investors?  That, too, at a critical juncture when the government is banking heavily on attracting more and more FDI to revive the ailing domestic economy? 

Nor will it be easy for the government to lightly brush aside the charge of ‘crony capitalism’ being increasing levelled against it by Opposition parties which have regained their voice of late and are seemingly gaining more public support with each passing day.  Specifically, the allegation is that the Modi regime appears to be particularly soft on the Adanis and Ambanis. Since Reliance Jio is poised to be the single biggest obvious beneficiary if competitors like Bharti Airtel, Tata Teleservices and Vodafone Idea are knocked out of the business of providing telecom services, the insinuations would get added traction.  

At least some of these repercussions are likely to weigh on the government in the immediate context, following the apex court’s decision to reject the plea for a review of the October 24 verdict against the three truant telecoms.  A decision will have to be made, one way or another, within the next few days - whether to partially relent or to remain firm. 

Either way, the government’s position would raise a hornet’s nest.  Taking pity on corporate giants who have been fleecing their customers for years would be incongruous morally and politically in a country where millions of humble citizens have been reduced to penury in just the last three years.   A benign bail out policy on the pretext of the ‘Too big to fail’ theory would be hard to sell in a scenario in which the little man is left to suffer and perish. 

On the other hand, turning a deaf ear to the pathetic death-throe pleas of the big three – along with the 12 smaller players who collectively owe a mind-boggling Rs. 1.47 lakh crore of arrears and not to forget the numerous non-telecom entities whose total outstandings are even higher at Rs. 3 lakh crore --  might bring in a windfall of desperately-needed revenues for the fiscally stricken government. But it would also strike terror in the boardrooms of potential foreign investors and thereby knock the bottom out of the five-trillion-dollar-economy pipe dream once and for all.  

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Jan 18, 2020