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Voda Idea seeks easier payment terms from tower vendors

Vodafone Idea has sought softer payment terms including additional time and partial payment of its outstanding dues, from Indus Towers, said people familiar with the development (Mint)Premium
Vodafone Idea has sought softer payment terms including additional time and partial payment of its outstanding dues, from Indus Towers, said people familiar with the development (Mint)

  • Vodafone Idea told stock exchanges on Friday that the No 3 carrier was in talks with country’s largest tower provider following reports of the latter considering revocation of services if its dues were not paid up

Vodafone Idea has sought softer payment terms including additional time and partial payment of its outstanding dues, from Indus Towers, said people familiar with the development.

Vodafone Idea told stock exchanges on Friday that the No 3 carrier was in talks with country’s largest tower provider following reports of the latter considering revocation of services if its dues were not paid up.

“The company has been in discussion with Indus for softer payment terms, which are continuing, but have not been concluded as yet. We wish to clarify that if any event occurs which warrants disclosure under the SEBI Listing Regulations, the Company will duly keep the stock exchanges informed of the same," the Aditya Birla Group promoted company said.

A senior executive aware of the developments said that the carrier has asked for more time to pay up and also sought flexibility of paying up in parts as well as room for negotiating lower energy costs besides rentals.

“Indus has recently renegotiated its master services agreements with telcos so Vodafone Idea may well have got better terms but they may have asked for more time," a second executive said.

Another senior executive said that tower service providers were sitting on several months of dues and disconnecting the towers in the event that dues are not paid up would be detrimental to Vodafone Idea which was continuing to generate revenue from its operations.

“They can also ask for surrender of a larger number of inactive sites without any exit charges," the executive said, asking not to be named.

Queries to Vodafone Idea did not elicit a response as of Friday evening.

The discussions come at a time when the loss-making carrier has been asked to pay up 80% of its current month’s dues and its full dues on a monthly basis going forward failing which access to the towers will be barred, according to an Economic Times report. The carrier’s dues to Indus and American Tower Corp mounted to over 10,000 crore.

Indus reported a 66% on-year fall in net profit to 477 crore for the quarter ended June 2022, which was 73.6% lower than the previous quarter. The dip was largely on the account of receivables due to the company from one of its major customers, it had said, not naming Vodafone Idea.

The carrier is yet to conclude its fund raise of more than 20,000 crore which it requires to remain competitive in the Indian market where rivals such as Bharti Airtel and Reliance Jio have laid out aggressive plans for launching 5G services. The top two carriers have already signed up vendors for telecom gear to be used for deploying 5G networks but Vodafone Idea is yet to finalise the contracts.

“We are in discussions with various vendors for 5G (gear) procurements, and also with banks for funding arrangements….once these two things are in place, we will take actions for deployment of 5G," Vodafone Idea’s chief executive officer Akshaya Moondra said at the 27th annual general meeting of the carrier last month.

ABOUT THE AUTHOR

Dilasha Seth

" Dilasha Seth is a journalist reporting on macroeconomic policy for the last 11 years. She writes extensively on issues including international trade, macroeconomic data, fiscal policy, and taxation. At Mint, she reports on trade deals that India is signing besides key policy decisions of the Ministry of Finance. She closely tracked and covered the transition to the goods and services tax (GST) regime in 2017 and also writes on direct tax-related issues. In the past, she has worked with Business Standard and The Economic Times. She is based in Bangalore."
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