Vodafone Idea Limited (VIL), the third-largest telecom operator, is going to receive Rs 5,836 crore from the promoter Vodafone Group. This amount is an outstanding due which arose from the legal liabilities linked to its 2017 merger with Idea Cellular. The agreement now has an amendment, which makes it simpler for Vi to recover money from the Vodafone Group. The March 2017 agreement created a Contingent Liability Adjustment Mechanism (CLAM) to compensate the company for tax, legal, and regulatory liabilities arising after the merger.
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So now, the Vodafone Group will firstly release Rs 2,307 crore in cash over the next 12 months. Then, the remaining amount will be given by the Vodafone Group by selling 328 crore equity shares in the next five years. Vodafone Idea can use these proceeds to upgrade infrastructure to compete with the private telcos.
At the time of writing this, Vi shares are trading at Rs 11.38, up 5.76% from the previous closing price. The telco is further looking to get support from the government for sorting out the adjusted gross revenue (AGR) dues. There were rumours circulating online that the government has given a five year moratorium to the telco for its AGR dues. But Vi clarified that it has not received any such communication from the government on Wednesday.
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The telco is trying to raise funds via debt to use it for network expansion and infrastructure modernisation. The government is cautious about announcing anything related to just Vi as that would affect the stock price of the company. This is because government is the largest stakeholder in the ailing private telecom company. Vi will launch 5G and expand 4G to more areas of the country in 2026, and it will be interesting to see if that's enough to compete with Jio and Airtel.
