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Kolkata: Vodafone Idea 's talks with lenders and vendors are on track and the failure of the curative petition in the Supreme Court on the adjusted gross revenue ( AGR ) issue would not affect those, because the case was not factored into the company's business plan or discussions, people familiar with the matter said. A person familiar with the matter said the curative petition was not factored into any business plan given to the lenders. Even the techno economic assessment that the lenders have done is favourable and does not talk about the curative ruling at all.
“We are in active discussions with multiple banks. A key milestone in this process was the updating of the independent techno-economic evaluation initiated by the banks, which was completed recently,” a Vodafone Idea (Vi) spokesperson said in response to ET’s queries. Advt The company added that its equipment deals with vendors for the enhancement and rollout of 4G and 5G network infrastructure is now in the final stages of discussions, and that Vi would close the agreements soon.
The comments come amid concerns that the telco could face big challenges in its efforts to raise Rs 25,000 crore via debt after the Supreme Court rejected telecom operators’ curative plea on AGR dues , which has left Vi facing massive statutory pay-outs from next fiscal year. Analysts view the failure to get any relief on AGR dues as a setback especially for Vi. “This will make Vi’s pending Rs 25,000 crore fundraise via loans much more challenging and costlier as banks will likely demand higher interest to hedge risks,” Rohan Dhamija, head (India & the Middle East) at management consulting firm Analysys Mason , told ET.
The people familiar with Vi’s strategy countered that by saying that at no stage did the telco factor in any relief from the SC while approaching lenders for debt. After concluding the equity fundraising of Rs24,000 crore, the telecom joint venture between UK’s Vodafone and India’s Aditya Birla Group has been looking to borrow Rs 25,000 crore from banks and other financial institutions and line up an extra Rs 10,000 crore via non-fund-based facilities, for mainly network expansion. With zero relief, Vi’s AGR dues as of the quarter ended June 2024 were Rs 70,320 crore, as per company data.
In a research note earlier this month, JM Financial had estimated that Vi would face an initial Rs 29,100 crore pay-out in FY26. After that, its annual pay-outs are estimated to be Rs 43,000 crore till FY31, assuming no AGR relief from the Supreme Court against telcos’ curative review petition. This is since the current moratorium on regulatory payments (on spectrum and AGR dues) ends in September 2025.
Advt Brokerage Macquarie said Vi now needs “timeline extensions” for repayment of its statutory dues and a “white knight”. “Given Vi’s still unresolved fundamental balance sheet and cash flow challenges, without AGR concessions, it would take at least 25-30 years (15% ARPU CAGR) for Vi to organically pay back its obligations, and as such, further repayment timeline extensions are required,” it said. One of the people cited earlier said the government could convert part of the statutory dues into a stake for it in the company, as had done in the past as part of a relief package for the telecom sector.
“We have already said that the relief package included the option for the government to convert principal dues into equity,” said one of the people cited earlier. Vi chief executive Akshaya Moondra has previously said the telco was looking at conversions of more government dues into equity and generating internal accruals to address pay-out obligations toward spectrum and AGR dues once the moratorium on these payments ends in September 2025. At the end of June, Vi had liabilities of around Rs 2.
09 lakh crore on spectrum, including Rs 70,320 crore in AGR-related payments. While debt from banks and financial institutions was modest at Rs 4,650 crore, it had cash and bank balance of Rs 18,150 crore, boosted by the recent Rs 24,000 crore fundraising through equity. In February 2023, the government had converted accrued interest of Rs 16,133.
18 crore on AGR dues into equity at Rs 10 a share, giving it a 33% stake. Following Vi’s recent follow-on public offer, government's holding reduced to 23.8%.
Moondra had told ET in April that the Centre’s stake could rise back to 32-33% if it decided to convert some of the principal dues into more equity. By Kalyan Parbat , ET Bureau Published On Sep 20, 2024 at 09:24 AM IST Telegram Facebook Copy Link Be the first one to comment. Comment Now COMMENTS Comment Now Read Comment (1) All Comments By commenting, you agree to the Prohibited Content Policy Post By commenting, you agree to the Prohibited Content Policy Post Find this Comment Offensive? Choose your reason below and click on the submit button.
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