We have had constructive discussions with our consortium of bankers

Vodafone Idea has resumed discussions with a consortium of banks to raise funds and also presented a detailed business plan to them. This comes after the government converted its accrued interest on the telco’s deferred AGR and spectrum dues amounting to `16,000 crore into equity.

The company will utilise the funds to prioritise payments essential for continuation of its operations, Akshaya Moondra, chief executive officer (CEO) of the company, told analysts during the post-earnings call on Wednesday.

“We have had constructive discussions with our consortium of bankers in the last couple of months, and with the government conversion now having happened, the discussions can progress because the patent condition of government conversion has been fulfilled,” Moondra said.

“We have shared business plan with banks which includes the complete current situation of where we stand and the funding required for us to gradually move to a regular vendor payment cycle and make the necessary investments,” he added.

Currently, out of its total `2.23-trillion gross debt, the company owes about `13,190 crore to banks and financial institutions. Out of `13,190 crore, it has an obligation to pay debt of `8,032.8 crore by December 2023.

“We have to delink the existing debt and servicing of that debt from the new funding. The new funding will be for investment. The existing debt will not be deferred, it will continue to be repaid on maturity,” Moondra said.

While the CEO did not talk about the amount it is planning to raise, Vodafone Idea’s board has in the past approved a fundraise of about `25,000 crore, of which it has received around `5,000 crore from its promoter group.

The company also runs a huge bill of around `10,000 crore payable to its vendors — ATC Telecom Infrastructure and Indus Towers. While it is issuing convertible debentures worth `1,600 crore to ATC, it said the company continues to constantly engage with Indus Towers.

“It is very clear that we need to get funding to be able to make investments and improve our operating cash flows. We then will be able to improve our vendors’ payment situation. Currently, we are prioritising all payments which are essential for the continuation of our operations. Beyond that, as we get the funding and start incurring and making investments and as we see cash generation from operations going up, that would be the basis of our starting to clear the backlog,” Moondra said.

Once the four-year moratorium on AGR and spectrum dues ends in 2025, the company will have to pay about `43,000 crore to the government, which includes regular AGR and spectrum-related dues as well as those deferred as part of the moratorium. The final amount is subject to confirmation from the Department of Telecommunications (DoT) and will be for the period October 2025 to September 2026.

Of `43,000 crore, the regular AGR (adjusted gross revenue) and spectrum-related dues will be `9,100 crore and `16,500 crore, respectively, whereas the deferred AGR and spectrum dues from the moratorium will be `7,400 crore and `10,000 crore, respectively.

“The reforms package also provides that these instalments can be converted to equity and adjustments can be made for each and every instalment independently after the moratorium period. So, when one looks at these instalments, these are to be seen a little differently. One is the regular stream of instalments and the second is the instalments arising out of the deferment which is governed by the reforms package, and they may have somewhat dispensed implications going forward,” Moondra said.

Asked about the plan to raise entry-level tariffs, he said the company is currently analysing the industry trends and will take a decision based on consumer interest. Referring to the recent tariff hike by Airtel, he said it has led to some improved trends in terms of its overall subscriber base in the two circles of Haryana and Odisha where its rival hiked the base tariffs first to `155. For rest of the markets where Airtel hiked the base tariffs, the trends are yet to be analysed, Moondra added.

According to Moondra, the tariffs should be increased in the unlimited plan segment where over a period of time the trend suggests a customer pays more for using more.

On its 5G plan, the telco said it would meet the government’s minimum rollout obligation to launch 5G in the first year of acquiring the spectrum and is in discussions with vendors for the same. Financial Express