Vodafone Idea, Bharti Airtel stare at huge penalties if forced to cancel deals with Chinese suppliers: Report
Vodafone Idea may be forced to pay $600-650 million to Chinese vendors if deals are scrapped, while Bharti Airtel might owe $300 million
June 22, 2020 / 12:39 PM IST
Telecom majors Vodafone Idea and Bharti Airtel may have to pay large amounts to Chinese firms such as Huawei and ZTE if equipment contracts are cancelled.
Vodafone Idea may be forced to pay $600-650 million to Chinese vendors if deals are scrapped, while Bharti Airtel might owe $300 million, The Economic Times reported.
Moneycontrol could not independently verify the story.
There have been calls to boycott Chinese products amid escalating military tensions along the Line of Actual Control (LAC).
If Vodafone Idea and Bharti Airtel are prohibited from doing businesses with Chinese suppliers, it will place further financial pressure on the telecom industry which is already hurt by adjusted gross revenue dues (AGR).
Telecom players have said the government has far not asked them to stop businesses dealings with Huawei and ZTE, the report added.
An Airtel spokesperson told The Economic Times that it has cordial relations with all its network gear suppliers and has enough cash to clear vendor dues if required. The company has "more than adequate cash flows to meet not just its financial commitments, but to continue to invest significantly," the spokesperson said.
Vodafone Idea, Huawei and ZTE had not yet responded to queries.
Vodafone Idea might owe around $450 million and $150-200 million to Huawei and ZTE, respectively, the report said. Bharti Airtel could be forced to pay around $300 million to Huawei for network gear purchases.
"If Vodafone Idea and Airtel are suddenly barred from buying network gear from Chinese suppliers, Huawei and ZTE may have no choice but to step up efforts to quickly recover the money the two incumbent operators owe them for gear supplies," an industry executive told the publication.