Vodafone Idea (Vi) has told the government that it will be opting for the four-year payment moratorium benefit on the dues. With this, Vodafone Idea (Vi) has become the first telecom operator in the country to accept the moratorium benefit from the government. According to an ET Telecom report, the cash strapped telco has further asked the Department of Telecommunications (DoT) about when it will receive the bank guarantees back from the banks.
Four Year Moratorium on Payments Will Ease Cashflow Problems for the Company
Because of a ton of debt, dues and capex on its shoulders, Vodafone Idea wasn’t in the best position to make new investments for 5G. A negative cash flow, especially at a time when the company was losing subscribers, it was being speculated that Vodafone Idea might go out of business soon. But that is not going to happen anymore.
The government has ensured that the stress of statutory payments is lifted off from the telecom sector. Vodafone Idea also has the option of converting the accrued internet dues into equity for the government. The telco is yet to comment on whether it is looking to do it or not.
With the bank guarantees (BGs) not being a threat anymore, Vodafone Idea’s cash flow position is going to improve dramatically. The telco will be able to make more investments for developing 5G technology and improve network coverage.
Vodafone Idea is also looking to raise up to Rs 25,000 crores from outside investors. The telco is also expected to get money from its promoters in the near future. Promoters infusing capital further into the company will definitely improve Vi’s image. This will attract more outside investors. The telecom operators are further expected to go for tariff hikes soon and that will also help Vodafone Idea. The government is also working on a relief measure that will help with reducing litigation in the sector.
