Vodafone Idea Won’t Default on Paying Back to Lenders

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Vodafone Idea (Vi), the third-largest telecom operator of the country has assured the banks/lenders that it won’t default on making its loan payments. The telco has taken multiple loans from several banks and lenders which it seeks to repay in the foreseeable future. The payment for the next instalment of the adjusted gross revenue (AGR) dues is not until March 2022 for the telco. As per an ET Telecom report, the operator has said that whatever cashflow it generates within the next year will be used to repay the loans. More details on the story ahead.

Lenders Have Faith in Vi’s Capability of Paying Back

A bank official has expressed that the telco had flagged the bank about its incapability of paying back the loans last year. But after the rebranding and plans for raising up to Rs 25,000 crore, the message from the telco has changed. Vi has communicated with the banks that it will clear all its dues and the banks trust the telco on its word.

The gut feeling of the bank officials is that the worst is behind for Vi. The best part for the telco is that until March 2022, the operator doesn’t have any spectrum payments to clear. So there is a lot of time for the telco to generate enough cash flow to start repaying its loans.

Vi owes Rs 11,200 crore to the State Bank of India (SBI), Rs 1,000 crore to the Punjab National Bank (PNB), Rs 5,000 crore to the Induslnd Bank, and Rs 1,700 crore to the ICICI Bank. These are the major lenders for the telco.

Even though the telco has promised that it will pay out the loans, it continues to lose subscribers every quarter. In the first quarter of this financial year, Vi lost 11 million subscribers followed by 8 million more subscribers in the next quarter.

Vi has to pay a total amount of Rs 50,000 crore in 10 instalments by 2031 for clearing its AGR dues. The operator needs to expand its 4G services to more parts of the country to sustain. Ravinder Takkar, CEO of Vi has expressed that the telco won’t mind being the first in the industry to implement tariff hikes.

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