The Supreme Court on July 23 rejected Bharti Airtel and Vodafone Idea’s claim of computation errors in Adjusted Gross Revenue (AGR)-related dues to the Department of Telecommunications (DoT).

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The total demand from Vodafone India is Rs 58,254 crore. Out of this, the company has paid Rs 7,854 crore and according to its self-assessment, it only owes Rs 21,533 crore to the government.

Deutsche Bank tried to map the best way forward for the company in a report, according which the fate of Vodafone Idea lies in hands of the government. “The government has been talking about wanting three players, but that claim has not been backed by sufficient action and therefore we cannot take that claim very seriously,” reads the report.

Peter Milliken, Research Analyst at Deutsche Bank believes government should take control of the company.

Milliken said that the growing concerning status of Vodafone Idea is very tangible and to get to breakeven profitability, the telecom firm has to lift revenues by 40 percent, which he said is a long way in a very competitive market. He added that the government has to decide, whether it wants bankruptcy for the firm or it wants to take control.

Milliken said, “Floor pricing is controlled, it is basically including a bureaucratic structure in the sector into the distant future probably. So if you are going to go that route of controlling the industry in one way, you may also go the other way which is much cleaner and just take control to a debt-to-equity swap because of the vast majority of the debt that they owe to the government.”

He explained that if the government wants to do a debt-to-equity swap, immediately the biggest problem Vodafone faces will start to go away and it will be in a position to compete, to pay for spectrum going forward. “Therefore we think the government should seriously consider moving into that direction,” he added.

According to Milliken, India is not a good market for new telecom players. “It has been a disaster for almost any company that has touched the market. We are getting towards the points where we can come out the other side and have a proper pricing structure but it is a lot of the interest of the other operators to list pricing at this stage when they have a chance to keep crushing Vodafone Idea on the market share until the point where they get bigger and bigger market share,” he explained.

For the full interview, watch the accompanying video.

(Edited by : Kanishka Sarkar)