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Vodafone Idea's board has approved a four-year deferment on payment of adjusted gross revenue or AGR-related dues amounting to 8,837 crore.

The government had given the telco an option of moratorium on payment of the dues beyond the earlier moratorium which was part of the relief package announced in September 2021, where AGR-related dues till FY17 were included.

"The Board of Directors of the company at its meeting held on 22nd June, 2022, has approved the exercise of the option of deferment of the AGR related dues by a period of four years with immediate effect," Vodafone Idea said in a communication to BSE.

VIL filing said that the DoT has offered the company a moratorium of four years for all AGR-related dues up to financial year 2018-19.

The carrier had received a letter from the department of telecommunications (DoT) which offered the moratorium on dues, stating the dues to be at 8837 crore, and providing the option of converting the interest on these dues of two additional financial years into equity, which it must decide on within 90 days from 15 June, or by 15 September.

"The amount of the AGR related dues as stated in the said DoT letter is Rs. 8,837 crores which is subject to revision on account of disposal of various representations, CAG/SpeciaI Audit/ and any other outcome of litigation and the final amount to be paid in six equal annual instalments post moratorium period starting from 31 March 2026," the carrier added.

The fresh lifeline offered by the government comes at a time when the Aditya Birla Group promoted carrier is awaiting conversion of interest on dues related to AGR on financial years upto FY 17 amounting to 16,000 crore, into equity, post which the government will own about 33% in the carrier becoming the single largest shareholder and promoter equity will reduce to 50% from near 75% at present. According to sources, the conversion into equity is expected to be completed before the 5G auctions begin next month-end.

If the carrier decides to convert interest on the additional dues of 8,837 crore into equity as well, the share of government holding is bound to rise from the proposed 33%. The government had first offered the option of moratorium on dues and converting interest on dues into equity in September last year as part of the relief package for all carriers, in order to improve the financial health of the sector battered by high debt and low tariffs leading to higher losses and limited revenue generation.

The fresh government offer also comes right after the Board approved raising 436.21 crore from Euro Pacific Securities, a Vodafone Group entity, through either issuance of up to 42,76,56,421 equity shares of the face value of 10 each or up to 42,76,56,421 convertible warrants on a preferential basis with floor price set as June 15. The carrier has called for an extraordinary general meeting for the allotment on July 15, less than two weeks before the auctions begin.

Carriers Reliance Jio, Bharti Airtel and Vodafone Idea are expected to bid over 71,000 crore on buying airwaves in the upcoming auction, including 5G airwaves, as per IIFL Securities. However, the payments to the government will be spread across 20 years, therefore the first set of payments in FY 23 are expected to be around 6200 crore, it said in a note. 

Telcos have begun building war chests anticipating the payment outgoes even though analysts expect selective bidding to be limited to a few bands including the 28 GHz band as it will provide huge savings on spectrum usage charge.

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