Cash-strapped Vodafone Idea (Vi) may get a cash-flow relief of up to Rs 60,000 crore by opting for the four-year spectrum payment moratorium. The telco has already communicated its decision of accepting the spectrum payment moratorium to the Department of Telecommunications (DoT). Vi also has the option until October 29, 2021, to decide whether it wants the adjusted gross revenue (AGR) dues moratorium as well for the next four years. Further, the telco has to communicate to the government in 90 days whether or not it wants to convert its interest that accrues because of the deferred payments into equity for the government.
Ind-Ra Believes Telcos to Get Medium-Term Liquidity Buffer
As per an ET Telecom report, Ind-Ra has said that the relief package from the government will provide the telco with a medium-term liquidity buffer. But the analyst also noted that it won’t impact the actual liability that has to be paid by the operators.
Ind-Ra believes that because Vodafone Idea has already accepted the four-year spectrum payment moratorium option, it can get a cash-flow relief of up to Rs 60,000 crore.
One of the best things that the new reforms have done for the telecom sector is the redefining of the AGR dues. Now the telcos won’t have to pay AGR dues on the non-telecom revenues. The government and the telcos had a long battle to address this issue only where the Supreme Court had ruled in favour of the government.
Ind-Ra said that the telecom sector is now showing signs of continuous improvements and the telcos might see their average revenue per user (ARPU) rising without any tariff hikes at all. But there’s no doubt that the telcos will go for a tariff hike in the next two quarters. The operators are increasing their subscriber market share as fast as possible.
