AWS and Vodafone Idea suspend BYJU services for non-payment of fees

Service providers such as Amazon Web Services (AWS) and Vodafone Idea have suspended their services to BYJU’S due to unpaid dues as the struggling edtech company faces growing challenges, including multiple legal disputes and a severe liquidity crisis.

BYJU’S has not paid AWS for at least two months and has not recharged its commercial telephony package for Vodafone Idea in August, people familiar with the matter said YourStory.

Amazon’s cloud computing platform AWS provided cloud services for the edtech company’s mobile application, while telecom service provider Vodafone Idea was the sole mobile provider for the edtech company.

BYJU’S, AWS and Vodafone Idea responded to requests from YourStory until the time of publication.

While the common contact number for BYJU’S Tuition Classes (BTC) and the main online application of BYJU’S was down since the beginning of this month, YourStory has independently verified the allegations.

BYJU’S mobile app crashes regularly, said the people quoted above

“AWS eventually decided to shut down the app. Usually, when a company delays payments, they are given the option to pay a small amount up front to continue using the services,” said one of the people quoted above, who asked to remain anonymous.

“With so many vendor payments piling up and no revenue coming in, it is becoming difficult for BYJU’S to make payments. The website is still functioning, but that is because they (BYJU’S) want to give the impression that the company is not closed,” the person added.

“Although the website appears to be working, server-related issues, which also occurred this month, are common at the beginning of each month and are usually resolved within an hour or so. During these periods, people cannot access courses,” said another person YourStory anonymous.

Technology companies often work with multiple cloud service providers as part of a multi-cloud strategy, but often rely on a primary provider for the majority of their services. If the primary provider ceases service, systems are typically designed to migrate hosting to other providers.

Although this failover process is designed to minimize disruption, there may still be disruption or downtime depending on how well the migration is planned and how good the compatibility is between different cloud infrastructures. According to sources, BYJU’S has moved its databases to Google Cloud.

The edtech company, which has been dragged to multiple courts in India and the US by its largest lenders and investors, has been battling a liquidity crisis for more than a year and has delayed payments to a number of suppliers. BYJU’S owes nearly Rs 380 crore to operational suppliers as of August 19, 2024, as per the Insolvency and Bankruptcy Board of India website.

YourStory had previously reported that the edtech company’s mounting problems had forced many employees to leave, while current employees were actively looking for new opportunities since the company struggled to pay salaries.

According to the second person quoted above, very few teachers volunteer to teach online classes because they are not compensated for doing so given the financial difficulties of the edtech company.

“They (BYJU’S) have not paid salaries to teachers for months, so most of the teachers have stopped teaching. There is absolutely no income coming in,” said another person, who wished to remain anonymous.

“The only IPs that work are Aakash and Great Learning,” the person added.

BYJU’S acquired Aakash Educational Services Limited (AESL) in 2021 for around $950 million. The Delhi-based exam preparation company is now valued at around $700 million. Ranjan Pai – the chairman of Manipal Education and Medical Group – is the largest shareholder with a 40% stake.

In the same year, BYJU’S acquired skilling startup Great Learning for $600 million. Last year, BYJU’S considered a possible sale of Great Learning to pay off debts related to a $1.2 billion Term Loan B with its US-based lenders.

Financial problems

The edtech company, which was once on track for success with a peak valuation of $22 billion in 2022, is currently in bankruptcy proceedings.

BYJU’s insolvency-related events began on July 16, when the National Company Law Tribunal in Bengaluru allowed a petition filed by the Board of Control for Cricket in India seeking initiation of Corporate Insolvency Resolution Process (CIRP) for BYJU’s parent company, Think & Learn Pvt Ltd.

Aakash has filed a lawsuit for Rs 1,400 crore against the company, according to a document YourStoryBesides Aakash, the company also owes Rs 20.3 crore to InCred Financial Services, Rs 47 crore to Aditya Birla Finance and over Rs 11,000 crore to Glas Trust.

Another document on the IBBI website also reveals that the tax authorities of the Government of India and the Government of Karnataka have claimed a claim of over Rs 848 crore under CIRP.

CIRP is a legal procedure under the Insolvency and Bankruptcy Act, 2016, which aims to resolve insolvency problems of corporate debtors within a specified period of time, typically through restructuring or liquidation.

Recently, the US-based lenders, represented by Glas Trust, demanded full repayment of the $1.2 billion B loan with interest, refuting Byju Raveendran’s claim that the company’s proven debt was only Rs 20 crore.

The Supreme Court is expected to hear Glas Trust’s appeal against an NCLAT judgment on September 17.