Vodafone Idea (Vi) and its battle with AGR (adjusted gross revenue) dues has been going on for years. The telecom operator has sought for relief from the government, and it has received plenty of it in the past. But the Supreme Court (SC) didn't entertain any requests of the telco for a relief. This was even when Vi told the court that it won't be able to continue if the AGR dues aren't reduced. But there's still one entity that can help Vi, and it's none other than Vi. The option to convert more dues into equity is out of the window, the government has cleared. However, there are still other ways Vi can be helped by the center.
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IIFL Securities, in a note has said that the government can file a modification plea with the Supreme Court. This can enable the government in reducing the interest dues by 50% and penalty and interest on penalties by 100%. It will be a huge relief for the telco in terms of cash outflow. But this won't just be beneficial for Vodafone Idea, but will also be amazing for Bharti Airtel.
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According to the calculations of IIFL Securities, the annual cash payouts for Airtel and Vi would reduce by Rs 7,500 crore and Rs 9,700 crore. This would definitely be a relief for the telcos. The government could also further extend the payment timeline for the telcos, resulting in major cash flow relief in the near future. This would alllow Vi to focus on business operations. Vi is trying to raise funds via debt that it would use to deploy networks. In simple words, the money the telco will raise will go towards the capex (capital expenditure) and not for clearing dues.
