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    AGR dues: Vodafone Idea accepts four-year spectrum payment moratorium, shares rise

    Synopsis

    “Vi has opted for the four-year spectrum moratorium and also sought details of the status of its BGs. Whether it opts for AGR moratorium and converts the interest on deferred payments into equity, will be told to DoT later,” said an industry executive aware of the development.

    Vodafone Idea
    Vodafone Idea has informed the government that it will accept the four-year spectrum payment moratorium, becoming the first telco to accept the deferred payment option provided under the telecom relief package.

    The cash-strapped telco has also enquired with Department of Telecommunications (DoT) by when will it get back its bank guarantees related to spectrum payments. It added that it will confirm at a later date, its decision on whether it would opt for the moratorium on adjusted gross revenue (AGR) payment and the option to convert interest on deferred payments into equity. The telco has till October 29 to confirm on the AGR payment moratorium.

    In afternoon trade, sShares of the telco were up 4.4% at Rs10.44 on the BSE Wednesday.

    “Vi has opted for the four-year spectrum moratorium and also sought details of the status of its BGs. Whether it opts for AGR moratorium and converts the interest on deferred payments into equity, will be told to DoT later,” said an industry executive aware of the development.

    vodas


    Vi’s decision comes on the back of a relief package announced by the government in the middle of September. It included a four-year moratorium on adjusted gross revenue (AGR) and spectrum payments, reduced BGs and the option to convert statutory dues to government equity.

    The package has changed the game considerably, potentially easing Vi’s immediate cash flow burden and if the telco opts for moratorium for both AGR and spectrum dues, it gets to save around Rs 25,000 crore in its annual cash flow.

    Beyond the immediate conversion of the interest on statutory dues into equity, the Centre also has the option of converting operators’ principle statutory dues owing to the deferred payment into equity at the end of the moratorium period – or after four years.

    Infact , DoT sent out the letters to the three telcos - Bharti Airtel, Reliance Jio and Vodafone Idea - last Friday and gave them time till October 29 to respond on moratorium options. Airtel and Jio have not responded yet.

    The telcos have 90 days to exercise their option of equity conversion.

    Vi managing director Ravinder Takkar had previously said it is open to converting the interest on deferred statutory dues into government equity. He had added that the four-year payment moratorium will ensure that the loss-making telco survives and is competitive.

    For the only loss-making private telco, even return of the BGs worth Rs23,000-25,000 crore will mean better equations with its lenders, who were also jittery in extending help to the cash strapped telco so far.

    Vi has a debt of Rs 1.9 lakh crore that built up as the business faced heat from competition. Of this, around Rs 1.6 lakh crore are statutory dues.


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    ( Originally published on Oct 20, 2021 )
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