Vodafone Idea to Reallocate Rights Issue Funds for Paying AGR Dues

Vodafone Idea has received a slight relief in terms of its cash flow with the two-year payment moratorium for Rs 42,000 crore

Highlights
  • Vodafone Idea will divert its rights issues proceeds towards paying AGR dues
  • The money was earmarked for paying deferred dues to the DoT
  • The total dues for VIL are Rs 53,000 crore

Currently, the biggest trouble for Vodafone Idea seems to be the Adjusted Gross Revenu (AGR) dues which the telecom operator has to pay before January end. The October 24 order which put a lot of pressure on the telecom companies to pay up massive dues in the name of Spectrum Usage Charges (SUC), license fees and interests also put immense pressure on Vodafone Idea regarding paying of dues which run north of Rs 53,000 crore in total. However, as per a new ETTelecom report, Vodafone Idea will use the Rs 25,000 crore rights issue and will divert some of the funds from there to pay up the AGR dues. Previously, it was decided that the Rs 25,000 crore rights issue was to be used for repayment of loans and the redemption of non-convertible debentures, including interest. But, now the board of directors of Vodafone Idea has decided that Rs 2,826.1 crore will be used from the Rs 25,000 crore rights issue to pay off the AGR dues.

vodafone-idea-rights-issue-agr

Vodafone Idea Might Just Repay Its Dues

This new move from Vodafone Idea comes after the telecom companies have been awarded a two-year payment moratorium by the Supreme Court for an amount of Rs 42,000 crore. Vodafone Idea has total dues worth Rs 53,000 crore to pay to the DoT and these include the penalties as well and the interest on these penalties. The deadline for the payment of the AGR dues has been set at January 23. Vodafone Idea, remarked on Sunday in its regulatory statement, “The board of directors of the company has, by a resolution dated January 10, 2020, approved the modification to the objects of the rights issue.”

Rights Issue Money to be Reallocated

It was back in last March that Vodafone Idea allotted about 20 billion equity shares (prima facie value of Rs 10 with a premium of Rs 2.50) by way of a rights issue on May 4, 2019, to raise nearly Rs 25,000 crore. According to the initial plan that was charted by Vodafone Idea, a total of Rs 18,674.78 crore was to be used to repay the deferred payment liabilities to the Department of Telecommunications. This amount also included the said Rs 2,826.1 crore which was also to be paid to the DoT out of the total Rs 6,277.1 crore in deferred liabilities and this amount was payable by April 9, 2020.

The relief to the telecom companies came in the form of the payment moratorium of Rs 42,000 crore which eased the cash flow problem by a little for both the companies. The three private telecom operators in the industry, Vodafone Idea, Bharti Airtel and Reliance Jio, all benefited from it. Vodafone Idea said about this, “The DoT has now granted a two-year moratorium on deferred payment liabilities towards spectrum payments to telecom companies, and hence the amount of Rs 2,826.1 crores earlier earmarked for payment of deferred payment liabilities identified in the letter of offer need not be utilised for that purpose.”

Telcos Still in Search of Relief

Out of all the telecom operators in the industry, Vodafone Idea is the worst-hit one with the AGR dues. While the total dues on the telecom companies for this matter scale up to Rs 1.47 lakh crore, Vodafone Idea has to pay Rs 53,000 crore to the DoT. Bharti Airtel, on the other hand, has to pay Rs 35,500 crore to the DoT for the same reasons. Both the companies have separately filed for a review petition in the Supreme Court to seek some relief in this matter.

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Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

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Abv

Will Vodafone idea survive AGR issue….

Faraz

Jio is giving cricket pack. BSNL is also offering various data packs. Why don’t they offer data only plans (If not closing 3G network like Airtel/BSNL) ?
They are in loss because they are not innovating and just following & also delaying in following also (where is WiFi calling?).
Hutch Stel etc were better.
I just wish any new telecom company to enter Indian market with 5G. There is a great opportunity with 5G as it is not just data network but a whole lot of IoT Business deals will come into play.

Nikhil

There is chance China will invest in VIL and Airtel.

bharathkumar

no chance, they will not give indian database into china, they will backlesh the china

Nikhil

There is no such proof. US is just pressuring other countries. Today UK gave befitting reply to US when US showed something ridiculous TO UK regarding Huawei Gear and data breach. It’s just trade deals. US wants to save Apple. That’s it.

Nikhil

Also, there are talks going on currently. But they have few conditions. Huawei should get atleast half of the circles as vendor. China is ready to pump in 100000Crore INR but with certain conditions.

Lalit

if GOI can give 5G trails approval to huawei then they can provide thier FDI approval aswell

Bhaskar

Yes,that’s true China mobile is looking for a suitable player for investment they have already talk to airtel and vodafone idea in December,im pretty sure its Vo/id will go for deal.only thing I look here is once it’s clear that the company now have share with china mobile,ready to port out..

Lalit

China mobile is looking to invest in both of them , officials have meet them in Dec 2019

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