Vodafone Idea Says It Can’t Furnish Rs 6,051 Crore BG: Report

Vodafone Idea (Vi) has appealed to the Department of Telecommunications (DoT) secretary, stating that its current financial position does not allow it to furnish a Rs 6,090.7 crore bank guarantee (BG) or make a cash payment of Rs 5,493.2 crore towards a shortfall in the 2015 spectrum auction. Under these circumstances, the company has asked the DoT not to take “any coercive action” against the company, ET has reported, citing a copy of the letter it has seen.

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Also Read: Vodafone Idea Fails to Provide Rs 6,090 Crore Bank Guarantee to DoT: Report

Company’s Appeal to the DoT

This comes as Vi has neither submitted the required BG of Rs 6,090.7 crore nor made a cash payment of Rs 5,493.2 crore to the DoT for the shortfall in its 2015 spectrum auction payments by the March 10, 2025, deadline.

According to reports, Vi’s chief executive Akshaya Moondra, has appealed to the DoT to urgently allow equity conversion of the telco’s upcoming adjusted gross revenue (AGR) and purchase dues related to the 2012, 2014, 2015 and 2016 spectrum auctions, as the cash-strapped company braces for a spike in regulatory payouts.

Moondra’s letter follows the telecom department’s decision to put on hold its proposal to waive the AGR dues of telcos amid a lack of consensus within the government’s top echelons. The prevailing view within the government is that providing financial relief to private companies—some of which are profitable—would be inappropriate.

“We urgently require cash flow support from DoT for AGR and spectrum instalments falling due… AGR dues and spectrum instalments for 2012, 2014, 2015 and 2016 auctions may be permitted for equity conversion at the earliest as envisaged under the Telecom Reform Package 2021,” Moondra reportedly stated in a March 11 letter to the DoT secretary. According to Vi’s letter, total equity conversions would amount to Rs 36,950 crore “on an NPV (net present value) protected basis.”