Vodafone Idea (PC-shutterstock)
Vodafone-Idea limited has written a letter to Department of Telecommunication (DoT) Secretary Anshu Prakash, saying the investors are not willing to put in money in telco unless tariffs rise and industry’s health improves.
Apart from this, the private telecom firm requested the DoT to extend the duration to pay its Rs 8,292 crores dues — related to spectrum purchased in auctions — by one year, i.e. from April 9, 2022 to April 2023. Vodafone-Idea (VI) cited the reason as it is not generating adequate cash from operations and adjusted gross revenue (AGR) payments are taking away liquidity.
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In the letter to DoT — dated June 25, VI mentioned that due to the adjusted gross revenue (AGR) upfront payment of Rs 7,854 crore and the upcoming payment of the first instalment of AGR — scheduled for March 2022, the firm will not be able to clear it spectrum dues on time.
“…we request you to please grant us another year of moratorium to pay this instalment in April, ’23, instead of April, ’22. We are making this request well in advance considering the fact that it is almost inevitable that we will not be able to pay this in Apr, ’22 and DoT will need some time for processing this request internally,” Vodafone Idea said in the letter to telecom secretary.
The telecom firm, in its letter had noted that it has been facing hurdles in meeting some of its large payment obligations and had cited prolonged period of prices remaining below the costs. Hoping for a floor pricing regulation would be brought in in April 2020 to address the issues of predatory pricing and losses, the firm said, however, it didn’t happen.
“We are working on raising new funding for the last six months but the investors are not willing to invest in the company because they believe that unless there is significant improvement in the consumer tariffs, the health of the industry will not recover and they will incur a loss on their investment,” Vodafone Idea said.
The Telecom Department has demanded around Rs 58,400 crore, out of which VI has paid Rs 7,854 crore. Additionally, it will have to pay the AGR instalments of about Rs 9,000 crore in March, 2022 based on the current demands of DoT.
“We have requested for corrections to be made to those (DoT) demands, and basis those corrections, we expect this amount may reduce to about half. However, even after such a reduction, a liquidity of Rs 12,500 crore is take away from our business,” VI said.
Citing the reason for request in advance, the telco stated their inevitability to make the payment by April 22 and DoT will need some time for processing the request internally.