Vodafone Idea Limited (VIL), the third-largest telecom operator in the country, could soon be able to surrender spectrum purchased before 2022. The Department of Telecommunications (DoT) is reportedly working on a plan that would allow the telcos (not only Vi, but also Airtel and Jio) to surrender spectrum acquired before 2022. This could potentially mean that Vi would surrender spectrum worth Rs 40,000 crore and free itself from a a signficant liability, said an ET report.
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The move would benefit Vi the most. Airtel and Jio have already prepaid maximum dues related to spectrum purchased before 2022. Vi has been struggling to pay these dues due to cashflow issues. If DoT allows the telcos to do this, then it would ensure that Vodafone Idea's financial health improves. Vi's cash outgo towards liabilities will reduce, and that could also have a positive impact on the telco's ability to raise money via debt.
Much recently, the Supreme Court (SC) of India said that it won't allow recalculation of the AGR (adjusted gross revenue) dues and interest on it. While this put the telcos, especially Vodafone Idea in a very difficult move, the company is expecting help from government in other ways to counter the effect of this. Thus the government could potentially allow the telcos to surrender spectrum, and Vi has plenty of it in excess.
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The Indian government also has a stake in Vodafone Idea, and while the center doesn't want to involve itself in the company's day to day business, it does want it to improve its situation. It is important for the government to ensure that a healthy competition in the Indian telecom sector exists and it doesn't become a duopoly between Airtel and Jio.
