Vodafone Idea Can Save Thousands of Crores With Govt Help

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Vodafone Idea
Vodafone Idea (Vi) can get a major relief if the government of India (GoI) allows it to surrender all the unused spectrum. At the moment, the telcos can also trade the spectrum with each other or keep it with them even if they are not using it. Not only that is wastage of a scarce national resource, but it also burdens the telcos’ without being of any use. However, if the rule was to change and the GoI allowed the loss-making telco to surrender all of its unused spectrum, it will be able to cut from its Rs 1.9 lakh crore worth of debt from its shoulders, believes BNP Paribas.

Vodafone Idea Can Benefit a Ton If Government Reduces Interest Rate

Further, according to BNP Paribas, if the government reduces the interest rate charged on the deferred spectrum liabilities, Vodafone Idea can potentially save thousands of crores. According to Kunal Vora, a senior telecom analyst at BNP Paribas, even a reduction of 2% annual interest in the deferred spectrum liability of Vodafone Idea (Vi) would result in savings of Rs 2,100 crore for the telco.

Further, shall the government decides to relieve Vodafone Idea from the interest that it has to pay on the adjusted gross revenue (AGR) dues, the telco can further reduce debt by up to Rs 4,000 - Rs 4,500 crores. In total, the two measures taken would let Vi reduce debt by up to Rs 6,600 crore immediately which will be a huge thing for the telco.

Any immediate relief for Vodafone Idea would in turn allow the telco to invest all the extra cash in its networks so that it can expand coverage and also be ready for 5G along with its rivals including Reliance Jio and Bharti Airtel.

Also, a tariff hike of Rs 30 for VI ( Vodafone Idea) would result in additional revenues of Rs 9,000 crores for the telco. It is now only a matter of time before the government will announce relief measures for the sector.

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