Vodafone Idea given three weeks to pay $270m in fines

Just as struggling Indian operator Vodafone Idea thought it had caught a break, telecoms regulator TRAI has demanded it pays millions in fines within weeks.

There doesn’t seem to be an official announcement from TRAI at time of writing, but Economic Times got the scoop. This latest financial assault concerns the activities of VI and Bharti Airtel at the time rival operator Jio was formed, specifically that they broke the terms of their licenses by not being helpful enough in the provision of points of interconnection.

We have no reason to believe TRAI is mistaken in its allegations and rules are rules, but in the context of VI’s potential collapse, leaving India with an effective telecoms duopoly, this still seems reckless. It has given VI and Bharti three weeks to come up with 2,000 crore and 1050 crore respectively, which we’re moderately confident equates to around $270 million and $130 million, respectively.

While Bharti can probably handle the hit it’s highly questionable whether VI can. It has threatened bankruptcy for a while and, if it can’t dig up the cash, it’s hard to see what alternative is has. That would leave the Indian government in the very dodgy political position of having driven it out of business, just weeks after it offered to take the edge of a bunch of other money it reckons VI owes it.

It’s hard to see what the Indian government’s strategy towards its telecoms sector is. Jio, which is owned by the country’s richest person, seemed to be given very favourable conditions for its creation and has since taken millions of subscribers from the incumbents. Maybe VI has more cash than it’s letting on but if it doesn’t, it’s hard to see how the Indian public is best served by fining it into extinction.