Vodafone Idea (Vi) and Bharti Airtel might get very good news super soon. Both the telcos have been waiting to hear about the relief package from the government. It is fair to say Vodafone Idea has been on its edge over the arrival of the relief package, while Bharti Airtel would be fine regardless of it came or not. Airtel will manage to raise capital, but the same can’t be said for Vodafone Idea, which is still struggling to find a new investor.
The relief package that will come is expected to push the adjusted gross revenue (AGR) payments of the telcos by four years. On top of this, the spectrum usage charges (SUC) are also expected to be cut down.
The Department of Telecommunications (DoT) has proposed both the moratorium on AGR payments by four years and a reduction in the percentage of SUC that operators pay today.
Government Might Just Buy a Stake In Vodafone Idea
According to an ET Telecom report, post the AGR payments are deferred, and the SUC is reduced, which in turn would allow Vodafone Idea to improve the operational profitability, the government might take a small stake in the company in case Vi is still struggling with the dues that it owes to the government.
The relief package is still something that the government and the finance ministry is deliberating over. The question that DoT and the finance minister is finding the answer for is whether the two decisions, including AGR payment deferment for four years and SUC reductions, should be announced at the same time or at different stages.
The publication’s report mentions that the discussions have already reached the final stage, and the government might come out with the announcement as early as this week.
Bharti Airtel isn’t expected to take the benefit of the moratorium of AGR payments because its payouts are quite less than Vodafone Idea, and the telco is going to raise cash soon with some profits in the bank. The reason why Airtel might avoid taking the AGR payment deferment benefit is that it will have some ‘interest’ factor involved.