Vodafone Idea Asks DoT Another Year's Moratorium for Spectrum Fees

In a letter to the DoT, Vodafone Idea said that it needs another year to pay ₹8,292 crore spectrum dues. The telco said that it is not able to generate adequate cash from operations. It also said that AGR payments are taking away liquidity.

Inevitable That We'll Miss Deadline for Spectrum Payments - Vodafone Idea to DoT

Vi also told the telecom department that investors are not willing to put in money into the telco. The investors cite low tariffs and poor health of the industry. The telco had written the letter on June 25th, saying that it won't be able to pay the first instalment of its spectrum dues, due on 9th April, 2022.

Vodafone Idea had on Wednesday said that it has written to the DoT.

In the letter to DoT Secretary Anshu Prakash, it said, "…we request you to please grant us another year of moratorium to pay this instalment in April, '23, instead of April, '22. We are making this request well in advance considering the fact that it is almost inevitable that we will not be able to pay this in Apr, '22 and DoT will need some time for processing this request internally".

A prolonged period of prices remaining below costs has put the telco in a tough spot. Vodafone Idea now finds itself in a situation where it won't meet some of its large payment obligations. The telco said that it hoped the telecom department will bring a floor pricing regulation in April 2020. Since that didn't happen, the situation has only worsened.

The letter read, "we are working on raising new funding for the last six months but the investors are not willing to invest in the company because they believe that unless there is significant improvement in the consumer tariffs, the health of the industry will not recover and they will incur a loss on their investment".

Large Payment Obligations Taking Liquidity Away from Vi

It further said that it has had to pay ₹7,854 crore of cash as upfront payment towards its AGR dues. It has to pay another ₹9,000 crore in March 2022 in AGR payments based on the current demands of DoT. Incidentally, the telecom department has demanded around ₹58,400 crore in AGR dues.

"We have requested for corrections to be made to those (DoT) demands, and basis those corrections, we expect this amount may reduce to about half. However, even after such a reduction, a liquidity of ₹12,500 crore is take away from our business," the telco said.

The telco summed it up as, "the inability of the operations to generate the required cash in a predatory pricing situation, we find that we will be unable to pay the instalment of ₹8,292 crore due on April 9, 2022. Hence, we request you to please grant us another year of moratorium to pay this instalment in April, '23, instead of April 22."

Yesterday, the telco had posted a net Q4 losses of ₹6985.1 crore, up from ₹4540.8 crore in Q3.