Shares of Vodafone Idea fell more than 6 percent after its chairman, billionaire Kumar Mangalam Birla, said the cash-strapped telecom company will have to shut shop if the government doesn't provide relief that it has sought.
The stock touched an intraday low of Rs 6.66 as against the previous close of Rs 7.31 on the Bombay Stock Exchange.
"We will have to shut shop," Birla told CNBC-TV18 at the Hindustan Times Leadership Summit when asked about the course of action for the company going ahead in the absence of government relief.
Birla's comment is the first such statement from a top telecom executive about the severe dilemma faced by these companies.
Last month, Vodafone Idea and competitor Bharti Airtel had warned that their ability to operate and make profits would depend on relief from the government, after the Supreme Court upheld a demand by the telecom department that wireless carriers pay overdue levies and interest.
Birla indicated that his group will not invest any money in the company in the absence of relief from the government.
"Don’t think I can call telecom business a failure," Birla said. "There is no sense that good money should follow bad money."
Birla said the company will have to opt for the insolvency route in the absence of relief.
Vodafone Idea had reported a record loss of Rs 50,921 crore for the September quarter after making a provision for the Supreme Court’s ruling on payment of average gross revenue (AGR) dues.
The company’s revenue from operations during the quarter plunged to Rs 10,844 crore from Rs 22,114 crore year-on-year.
Vodafone chief executive officer Nick Read said earlier this month its future in India could be in doubt unless the government stopped hitting operators with higher taxes and charges, after a court judgment over licence fees resulted in a 1.9 billion euro group loss in its first half.
Vodafone Idea hiked tariffs for its pre-paid plans effective from December 3, a first in past four years, under which call and data charges will be dearer by up to 42 percent.
Vodafone Idea will also charge 6 paise per minute for every outgoing call made by customers on to the network of other operators.
After the entry of Reliance Jio in the telecom sector in 2016, the telecom operators have been slashing down the recharge tariffs in order to tackle the cut-throat war from Jio.