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Business News/ Companies / News/  Vodafone Idea lenders urge government for moratorium on spectrum payments
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Vodafone Idea lenders urge government for moratorium on spectrum payments

Vodafone Idea needs to pay Rs22,500 crore between December 2021 and April 2022 to repay a mix of regular debt to lenders, AGR and spectrum dues. Besides, the company had term loans of Rs13,826 crore and guarantees and LoCs of Rs23,737 crore

Vodafone Idea owes the government and banks a total of Rs1.8 trillion. (Photo: Mint)Premium
Vodafone Idea owes the government and banks a total of Rs1.8 trillion. (Photo: Mint)

MUMBAI: Lenders have been urging the Centre to allow a moratorium on spectrum payments to Vodafone Idea and offer a lifeline to the stressed telco overburdened by debt and statutory repayments.

According to two people aware of the discussions, there are a few options on the table to ensure the Aditya Birla Group and UK-based Vodafone Plc-promoted telecom company does not go belly up. The first and foremost of those options is to ensure the company gets a breather on spectrum payments.

Excluding lease liabilities, it owes the government and banks a total of Rs1.8 trillion. It has an adjusted gross revenue (AGR) liability of 58,254 crore, of which the company has paid Rs7,854.37 crore and another Rs50,399.63 crore is due. That apart, it also has spectrum dues of Rs96,270 crore, to be paid in tranches.

“While banks have repayments coming up in December and later next year, Vodafone has to pay significantly more on account of statutory payments in AGR and spectrum dues. We are holding meetings on this account and hope some solution soon emerges," said the one of the people cited above.

The person added that referring Vodafone Idea to the insolvency tribunal is not being discussed at the moment because past experiences have shown unattractive recoveries from telcos through that route. He also said that under the Insolvency and Bankruptcy Code (IBC), recoveries depend on the assets of a company. Since telcos only have spectrum as assets, which anyway cannot be sold unless bank dues are cleared, insolvency is not being preferred right now.

Vodafone Idea needs to pay Rs22,500 crore between December 2021 and April 2022 to repay a mix of regular debt to lenders, AGR and spectrum dues. Besides, a Care Ratings report pointed out on 7 January that the company had term loans of Rs13,826 crore and guarantees and letters of credit of Rs23,737 crore.

The other person said while AGR dues cannot be changed or postponed because of the ongoing case in the Supreme Court, spectrum payments are in the government’s control to tweak. News agency PTI reported on 12 August that Vodafone Idea Ltd (VIL) has filed a review petition in the Supreme Court after the apex court recently dismissed its plea for rectification of the alleged errors in the calculation of adjusted gross revenues-related dues.

To be sure, bankers said the company was not classified as stressed but, efforts are on to ensure its survival and not let the telecom space become a duopoly.

“For the moment it is not stressed. We are looking into it. There is one particular account where the exposure is large, and we are following up very-very closely. All of us are concerned about it, but by and large the telecom is okay," said Ashwani Bhatia, managing director at State Bank of India (SBI) without naming Vodafone, on 4 August after the bank announced its Q1 FY22 results. SBI’s exposure to Vodafone Idea stands at around Rs11,000 crore.

Separately, SBI chairman Dinesh Khara had said the bank will take all possible steps to ensure that the balance sheet is insulated from any such kind of a potential threat.

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ABOUT THE AUTHOR
Shayan Ghosh
Shayan Ghosh is a national writer at Mint reporting on traditional banks and shadow banks. He has over a decade of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.
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Updated: 14 Aug 2021, 09:18 AM IST
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