Hughes India arm fears closure over dues to government

The Supreme Court late last year ordered a number of telecom companies, including Hughes and larger firms like Vodafone, to pay billions of dollars owed to the government.

Hughes’ India unit provides services to defence, education and banking sectors in the country and told India’s telecoms minister in a letter dated Feb. 20 that it faces bankruptcy as it can’t pay the 6 billion rupees ($84 million) it owes.

The closure of the company could disrupt connectivity at more than 70,000 banking locations and many critical satellite networks in the Indian navy, army and railways, Hughes’ India President Partho Banerjee said in the letter, which was seen by Reuters. “We are facing a huge demand ... which by no means is serviceable by us and is in fact pushing our company towards bankruptcy & closure,” Banerjee wrote in the letter.

“This is an SOS request,” he added. The company says the government’s telecoms department had made an incorrect calculation of the dues more than a decade ago which has ballooned to $84 million with interest and penalties.

Hughes, would not comment on the substance of the letter but said in a statement it “remains committed to India” and would continue to provide services to its customers.

India’s telecoms ministry did not respond to a request for comment.

Vodafone Idea, which owes $3.9 billion in dues, interest and penalties, has already warned of a potential exit, putting at risk 13,000 employees and billions of dollars inbank loans.

India’s claim for unpaid dues followed a dispute with companies over how adjusted gross revenue, a percentage of which companies need to pay to the government as fee, was calculated. While the $84 million Hughes owes is significantly smaller than the sums owed by larger peers, a company document from December showed it was still more than three times its net worth in India.