Vodafone Idea Pays 50% License Fees, Spectrum Usage Charges For March Quarter: Report

Vodafone Idea has assured the Department of Telecommunications (DoT) that they will clear 90 per cent of the dues for the June quarter, including interest payments, in a phased manner.

Vodafone Idea (VI) has paid 50 per cent of its license fees and spectrum usage charges (SUC) owed for the March quarter, reported The Economic Times (ET). Additionally, they have also assured the Department of Telecommunications (DoT) that they will clear 90 per cent of the dues for the June quarter, including interest payments, in a phased manner, the report said citing DoT officials. 

According to the company's first-quarter earnings, VI's total gross debt as of June 30, 2023 stood at Rs 2,117.6 billion which includes deferred spectrum payment obligations of Rs 1,337.4 billion, AGR liability of Rs. 668.6 billion that is due to the government, debt from banks and financial institutions of Rs. 95 billion and optionally convertible debentures amounting to Rs. 16.6 billion.

The report said that DoT officials said that as long as the company adheres to its payment schedules, the department will refrain from using the bank guarantees. However, if the company fails to meet its commitments, the guarantees will be cashed. 

"They (Vi) have written to us that significant progress has been made with several groups of investors but nothing specific has been informed by the company," an official told the ET.

"Once the promoters infuse the Rs 2,000 crore into the company, there may be some movement on external funding," another government official was quoted as saying. 

The report noted that as of now the government holds the largest stake in the company at 33.1 per cent. However, it maintains a hands-off approach to the company's day-to-day operations. Over the past two years, the government has granted several extensions for statutory payments, given that VI has been paying interest to compensate for the delays. Additionally, recent telecom reforms have eliminated provisions for imposing penalties.

Vodafone Idea has encountered challenges in raising funds during this period, impacting its ability to expand its 4G network and initiate the 5G rollout. This financial constraint puts VI at a disadvantage compared to competitors such as Reliance Jio and Bharti Airtel.

According to the report, VI CEO Akshaya Moondra has told DoT that they are close to arranging a Rs 4,000-crore short-term loan from the SBI to pay for its pending statutory dues as well as spectrum installment. The company has requested a 30-day extension to fulfill its payment obligation for the 2022 spectrum auction installment. The original due date for this installment, amounting to Rs 1,680 crore, was set for August 17. However, Vodafone Idea (VI) has been granted a 30-day extension, subject to interest charges.

Notably, while the government had provided a four-year payment moratorium for payments related to past auctions, the 2022 spectrum auction was not included in this arrangement. The payment moratorium is set to end in the third quarter of the 2025-26 fiscal year. Following this, VI will be required to make annual regulatory payments exceeding Rs 40,000 crore, the report said.