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Vodafone Idea on Wednesday said that its board has opted for India's telecom department's four-year spectrum payment moratorium from October 2021 to September 2025. It is the first telco to accept the portion under Department of Telecom's recently launched telecom relief package.
“…we wish to inform you that the Board of Directors of the Company has approved the exercise of the option of deferment of the Company’s spectrum auction instalments for a period of 4 years…" the debt-laden teleco said in a regulatory filing.
“The other options offered in the said notification by DoT will be considered by the Board of Directors of the Company within the stipulated timeframe. The above is for information and dissemination to the members," it further added.
The telco still has time as the government has now written to telcos, including Bharti Airtel, Vodafone Idea and Reliance Jio, asking them to convey by October 29 if they would be opting for four-year dues moratorium, reporter news agency PTI citing sources.
Shares of Vodafone Idea rose over 5% to ₹10.57 apiece on BSE after the news broke.
Recently, the government approved a blockbuster relief package for the telecom sector that includes a four-year break for companies from paying statutory dues, permission to share scarce airwaves, change in the definition of revenue on which levies are paid and 100 per cent foreign investment through the automatic route.
The measures, aimed at providing relief to companies such as Vodafone Idea that have to pay thousands of crores in unprovisioned past statutory dues, also include the scrapping of Spectrum Usage Charge (SUC) for airwaves acquired in future spectrum auctions.
For the past dues, the government has allowed a moratorium or deferment of up to four years in annual payments. But the telecom companies will have to pay interest during the moratorium period.
Also, the government will have an option to convert the due amount pertaining to the deferred payment into equity at the end of the moratorium/deferment period.
It has also given an option to the telcos to pay the interest amount arising due to the said deferment of payment by way of equity.
Last month, Bharti Airtel Chairman Sunil Mittal said the company will opt for payment moratorium, offered in telecom relief package, and redirect the cashflow to aggressively build networks.
With regard to interest dues on payment moratorium, Mittal had said that Airtel will weigh, when the offer comes from the government, on whether to go for equity conversion mechanism or pay cash.
The company's board will take a decision at that point Mittal had said adding that with interest component working out to ₹7,500- 10,000 crore, the stake involved may work out to 2-3 per cent, in case the company opted for it.
The moratorium will free up cash flow to the extent of ₹40,000 crore and that amount is sufficient to meet the market's requirements, he had said.
With inputs from PTI
