Vodafone Idea, Airtel Pay Up Rs 9000 Crore Dues For Spectrum

Vodafone Idea, India’s largest telco by subscribers, and second-ranked Bharti Airtel have paid spectrum dues worth over Rs 9000 crore to the government recently, officials in the Department of Telecommunications said.

Vodafone Idea paid Rs 6277 crore for the spectrum it had bought in auctions, while Bharti Airtel paid about Rs 2,800 crore, a senior DoT official said.

Vodafone Idea borrowed money to help clear the dues after the department rejected its request for a moratorium on spectrum payments. It proposes to repay the loans after a rights issue this month.

“Our company has arranged a short-term bridge loan of Rs 3000 crore from HDFC Bank,” Vodafone Idea said in its rights issue document filed with the stock exchanges on March 26. “Our company will re-pay this short-term bridge loan from the net proceeds (of the rights issue).”

Vodafone Idea’s rights issue to raise Rs 25,000 crore opens on April 10. The company said it planned to take short-term loans for the remaining amount of Rs 3277.1 crore or finance it through internal accruals.

The last date of payment for the three private sector operators, including Reliance Jio Infocomm, is April 10. At the time of going to press, ET could not confirm if Jio had made its payments. Reliance Communications defaulted on its spectrum payment of Rs 281 crore, which fell due on April 5.

Vodafone Idea chairman Kumar Mangalam Birla had sought a two-year moratorium on annual spectrum payments of over Rs 10,000 crore due this year, citing high debt levels and stress on cash flows amid continuing competition and its need to focus on a complex and expensive network integration process. The request wasn’t accepted by the DoT.

Before they merged in August 2018, Vodafone India and Idea Cellular each participated in spectrum auctions held in 2010, 2012, 2014, 2015 and 2016. Vodafone India alone acquired spectrum worth Rs 79,343 crore while Idea Cellular purchased spectrum worth Rs 63,597 crore. The spectrum payment liability is now on Vodafone Idea.

Vodafone Idea paid Rs 3042.7 crore to the DoT last month. The telco is expected to plough roughly 75% of the funds raised from its upcoming rights issue for debt repayment, which includes money owed to the DoT for airwave purchases. Vodafone Idea’s net debt stood at almost Rs 1.15 lakh crore at December end.

Bharti Airtel, too, is preparing for a Rs 25,000 crore rights issue to fund network expansion and debt repayments. The telco, which paid Rs 1918 crore to the government on similar dues last month, had debt of Rs 1.06 lakh crore at December end.―Gadgets Now