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Telecom reforms to allow Vodafone Idea to invest in new tech including 5G

The telecom reforms announced by the government recently will enable Vodafone Idea (Vi) to invest in new technology and services, including 5G, whenever the ecosystem is ready, the company’s Non-Executive Chairman Himanshu Kapania said. During Vi’s annual general meeting held online on Wednesday, Kapania said the telecom reforms will not only provide immediate financial relief to the operators through a four-year moratorium on government dues but will also give an impetus to Prime Minister Narendra Modi’s vision of Digital India.

In mid-September, the government had announced a series of measures to provide relief to the telecom operators and boost investment in the telecom infrastructure. The immediate relief comes in the form of a four-year moratorium on all dues that are to be paid to the government.

“The moratorium for the next four years on all government dues, including spectrum liability and AGR dues as per the recent Supreme Court order, will enable Vodafone Idea to further boost its 4G coverage and capacity and provide deeper rural connect. It will also allow the brand to invest in new technologies and services, including 5G, whenever the ecosystem is ready and spectrum affordable,” Kapania said.

Vi had a total gross debt of Rs 1.91 lakh crore, excluding lease liabilities and including interest accrued, but not due as of June 30, 2021. The debt comprises deferred spectrum payment obligations of Rs 1.06 lakh crore and an AGR liability of Rs 62,180 crore that are due to the government and debt from banks and financial institutions of Rs 23,400 crore.

The company had posted a consolidated revenue of Rs 9,152.3 crore during the April-June 2021 period, and the finance cost was Rs 5,228.4 crore.

Kapania, who replaced Kumar Mangalam Birla on the company’s board in August, said the government’s reforms will address some of the long-standing issues in the sector. They will help telecom operators manage their free cash flows and enable investible funds in the hands of telecom operators for fresh capex deployment in building long-term digital infrastructure.

“Through this telecom structural reforms landmark decision, the government has truly demonstrated their commitment to establishing a healthy market structure of at least three private players,” Kapania said. PTI

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