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Vodafone To Not Use Rights Issue Proceeds For Spectrum Payments After DoT Relief

Vodafone Idea Ltd board has approved a proposal by the company to modify the utilization of its rights issue proceeds to use Rs. 2,826 crore for repayment of loans and redemption of non-convertible debentures, including interest. This comes after a two-year moratorium granted by the department of telecommunications (DoT) on deferred payment liabilities towards spectrum payments.

The telecom giant in its letter of offer dated 22 March, 2019 had allotted about 2,000 crore equity shares (face value Rs10 with a premium of INR 2.50) by way of rights issue on 4 May, 2019 for an aggregate amount of Rs. 24,999.8 crore (issue proceeds).

Under the letter of offer, Vodafone Idea had proposed to utilize Rs. 18,674.7 crore towards payment of certain deferred liabilities to the DoT and repayment of certain borrowings, including interest payment and spectrum dues, it said in a regulatory filing.

“We may have to revise our funding requirements and deployment on account of variety of factors such as our financial condition, business requirements and strategy, including external factors such as market conditions, changes to the payment schedule for our deferred payment liabilities to the Do T, competitive environment, interest or exchange rate fluctuations and finance charges, which may not be within the control of the management of our Company,” the company added.

The government gave beleaguered telecom operators Bharti Airtel Ltd and Vodafone Idea Ltd a breather by allowing them to defer payments for spectrum purchases by up to two years.

The move to defer payments for 2020-21 and 2021-22 will be a relief to these companies while helping Reliance Jio Infocomm Ltd as well. It follows the Supreme Court’s 24 October ruling that directed older telecom firms to pay at least Rs. 92,000 crore in past dues to the government within three months.―Livemint

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