DoT drafting crisis plan for potential collapse of major telco

20 Mar 2020

India’s Department of Telecommunications (DoT) is preparing a crisis plan to cater to the millions of customers and businesses that would be affected if any of the country’s major providers collapses, the Economic Times writes. The development follows a decision by the Supreme Court earlier this week to reject potential relief measures that would have helped the already financially stressed industry cope with the burden of the roughly INR1.47 trillion (USD19.5 billion) in Adjusted Gross Revenue (AGR)-related dues imposed by the same court in October 2019. Vodafone Idea has consistently warned since the October decision that it would be forced to shut down if there were no relief measures from the government. Vodafone Idea was able to scrape together a total of INR68.5 billion before the most recent Supreme Court hearing this week, but the DoT’s estimates put the company’s AGR bill at around INR530 billion. Bharti Airtel, meanwhile, has weathered the recent storm comparatively well but may nevertheless struggle to raise the rest of the approximately INR356 billion the government claims it is owed. Airtel has so far paid INR180 billion, which it claimed was the ‘full and final’ amount. Should either player collapse, the sudden migration of their customers to the surviving players would overload the systems in place to port users. Vodafone Idea currently serves over 300 million mobile customers, whilst Airtel’s subscriber count was 283 million at end-December 2019.

Commenting on the situation an unnamed senior official was quoted as saying that ‘none of the operators will have the capacity to suddenly handle such a large influx. There will be chaos if a contingency plan is not worked out.’