December 9, 2021

The World Stock Markets Tips & Targets, News, Views & Updates

The World Stock Markets Tips & Targets, News, Views & Updates

Vodafone Idea to accept four-year spectrum payment moratorium

Vodafone Idea has informed the government that it will accept the four-year spectrum moratorium, becoming the first telco to accept the deferred payment option provided under the telecom relief package. The cash strapped telco has also enquired with Department of Telecommunications (DoT) by when will it get back its bank guarantees but added that it will confirm its decision on moratorium on adjusted gross revenue (AGR) and option to convert deferred interest into equity, later.

“Vi has opted for the four-year spectrum moratorium and also sought details of the status of its BGs. Whether it opts for AGR moratorium and converts the interest on deferred payments into equity, will be told to DoT later,” said an industry executive aware of the development.

Vi’s decision comes on the back of a relief package announced by the government in the middle of September. It included a four-year moratorium on adjusted gross revenue (AGR) and spectrum payments, reduced BGs and the option to convert statutory dues to government equity.

The package has changed the game considerably, potentially easing Vi’s immediate cash flow burden and if the telco opts for moratorium for both AGR and spectrum dues, it gets to save Rs 25,000 crore in its annual cash flow.

Beyond the immediate conversion of the interest on statutory dues into equity, the Centre also has the option of converting operators’ principle statutory dues owing to the deferred payment into equity at the end of the moratorium period – or after four years.

Infact , DoT sent out the letters with concurrence of the Ministry of Finance, to the three telcos –

, Reliance Jio and Vodafone Idea last Friday and gave them time till October 29 to respond on moratorium and equity conversion options. Airtel and Jio have not responded yet.

Vi is open to converting the interest on deferred statutory dues into government equity, managing director Ravinder Takkar had told ET, adding that the four-year payment moratorium will ensure that the loss-making telco survives and is competitive.

For the only loss-making private telco, even return of the BGs worth Rs23,000-25,000 crore will mean better equations with its lenders, who were also jittery in extending help to the cash strapped telco so far.

Vi, aiming to raise Rs 25,000 crore from global investors has a debt of Rs 1,9 lakh crore that built up as the business faced heat from competition.

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