State of Vodafone idea

With long-term liabilities of Rs 104,402 crore and short-term borrowings of Rs 4,120 crore as of March 2019, Vodafone Idea Limited may throw up a new challenge for banks and financial institutions saddled with recovery of huge non-performing assets (NPAs).

Sources in the banking and mutual fund (MF) industry say that if the telco fails to recover from the lows it has hit, it may put additional burden on banks and other financial institutions and it is time forthe government to look at the issue as the issue of India’s telecom industry.

State of Bharti Airtel

Bharti Airtel announced a loss of over Rs 23,045 crore for the quarter ended September 2019, Vodafone Idea announced a record loss of Rs 50,922 crore for the quarter.

Bankers are concerned over the current development and say that any relief for the telecom sector will not only help the sector players but even the banks are awaiting relief for the sector due to their huge exposure.

Bankers said the situation in the telecom sector is worrisome, complicated by the recent Supreme Court ruling on AGR. “If there’s liquidation, we don’t hope to recover much from the telecom companies,” they said.

Analysts said it would be tough for telcos to raise fresh resources in view of the huge losses. While promoters are unlikely to inject more funds, banks will not extend fresh loans in the wake of the crisis situation, they said.

Source: The Indian Express

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