If the Indian government is still counting on operator Vodafone Idea to pay vast AGR dues and compete effectively in the tough Indian mobile communications market, recent rumoured vendor uncertainty may have given it pause.
According to Indian press reports, a number of kit vendors, including such big names as Ericsson, Huawei, Nokia and ZTE, are not taking new orders for 4G equipment from Vodafone Idea, at least for the moment. The reports suggest that the vendors are worried about recovering payments from Vodafone Idea, which has serious ongoing revenue problems.
Bearing in mind the operator’s own comments to the Supreme Court, when it was looking for more time to pay its adjusted gross revenue (AGR) dues, that no bank was willing to provide any guarantees given its debt, Vodafone Idea’s position is a bit tricky to say the least.
And of course, to continue to compete it needs to expand to meet subscriber demand and to keep the subscribers is already has, although subscriber losses are already being reported. How it will pay for that expansion is not clear; it already has billions of dollars of debt that include about $6.7 billion in AGR dues.
A Supreme Court ruling is due on whether operators like Vodafone Idea and Bharti Airtel will be given time (15 or more years has been suggested) to pay their AGR dues. That may help, but both continuing 4G rollout and, in the longer term, 5G provision, will make further demands, not least in terms of payment for 5G spectrum.