Vi’s search for investors continues, Sept 17 approaching

Vodafone Idea had received a 30-day extension to make payment (with interest) for the 2022 spectrum auction instalment. The due date was August 17 for an instalment of Rs 1,680 crore. The telco is in an unenviable position, as failing to pay its government dues, will result in its bank guarantees being revoked and encashed.

Vi CEO Akshaya Moondra had reported that the telco is in the process of securing a short-term loan of ₹4,000 crore from the State Bank of India (SBI) to cover pending statutory dues and the second instalment of ₹1,680 crore for 5G spectrum purchases.

In the last week of July, Vi had paid ₹77 crore toward license fees, significantly lower than the ₹770 crore due for the April-June quarter. Additionally, the company had settled nearly ₹14 crore in spectrum usage charges (SUC), as opposed to the ₹137 crore owed in the fiscal first quarter.

Telcos pay 8% of their adjusted gross revenue (AGR) as licence fees to DoT. And Vi’s quarterly SUC payout is over 1% of AGR – down from 3-4% of AGR earlier – after the government stopped charging this statutory fee on airwaves bought from last year’s 5G auction onwards.

Backgrounder
Vi CEO Akshaya Moondra had informed the Department of Telecommunications (DoT) about the company’s receipt of term sheets from various potential investors. In a letter dated August 8, Moondra had conveyed to the DoT that securing external funding would kickstart an accelerated CapEx plan of ₹65,000 crore over four years, aimed at revitalizing the company’s operations.

Moondra had also stated that one of these prospective investors is seeking a meeting with government authorities to seek reassurances regarding continued support for Vi. However, so far DoT has not met any investor.

The government holds a 33.1% stake in Vi, while UK-based Vodafone Group owns 32.3%, and India’s Aditya Birla Group possesses 18.1%.

The company has been prioritizing payments to banks and financial institutions over vendor payments, leading to a reduction in dues to banks by 37.5% in a year. Moondra anticipates that bank debt will soon fall below ₹6,000 crore.

CT Bureau