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Akshaya Moondra, CEO, Vodafone Idea Limited elaborates on Q2 FY24 performance

Vodafone Idea has been in the doldrums for quite a while now, despite the government converting its dues into equity and becoming its largest shareholder. A revival of the wireless operator would prevent India’s telecom sector becoming a duopoly, which restricts competition.

Speaking at the Q2 earnings call of Vodafone Idea, Chief Executive Officer Akshaya Moondra said that growth CapEx for 4G coverage expansion and 5G roll-out will happen based on the new funding being tied up. Discussions related to equity investors are expected to be concluded in this quarter. “Currently our focus is on tying up the equity investment, basis which then the banks will process the request for bank funding and process their internal approval”, he said.

On if one promoter is pitching in with financial support of Rs 2,000 crore, the VIL CEO said the telco expects the promoter’s contribution to come alongside the tie-up with external investors. “In the last quarter, we have gotten a letter from the promoters that support us to the extent of ₹2,000 crore. Till date, they have not actually contributed anything. We have gotten some bank funding to tide over the short-term mismatch we had in the last quarter. The promoters’ commitment is there. They have said they will support as and when required, and we expect that this contribution should also come alongside the tie-up with external investors,” he added.

“The total equity plus bank funding that we are targeting is of a nature that we should be able to use that funding to make the investments,” Moondra said. “And then we improve the operations to a point where we become self-sufficient in terms of cash generation from business being able to meet our requirements largely.”

The company is also in discussion with various network vendors for the finalisation of the roll-out strategy, while noting that any significant CapEx toward networks will be done after funding is secured. Moondra added that the company was asking the equity partners for funding to use some of the proceeds toward paying up outstanding vendor dues, even as the telco was aiming to quicken the pace of paying up outstanding dues to vendors.

Vodafone Idea set aside provisions for a tax charge of ₹820 crore owing to the liabilities arising from the Supreme Court’s judgement on treating license fee as capital instead of expenditure but does not expect the cash outgo to be immediate or higher than the refunds it is expected to get from other ongoing tax litigation.

“We have large amount of tax refunds, which we are yet to receive from the tax department. This can convert to cash outflow once tax department completes its calculation,” Moondra said, adding that the tax refunds will most likely offset the tax demand and there will no cash outgo.

He added tariff rationalization was required, and the structure should move towards consumers that use more to pay up a higher range of tariffs, such that carriers can get a return on their investments made towards network roll-outs.

On the business impact in absence of 5G, the company said it has not witnessed any significant impact on subscriber base as of now.

CT Bureau

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