Vodafone Idea Writes to DoT Citing Inability to Pay Quarterly License Fees

Vi will have to pay Rs. 6,000 crore in the Q1FY23, when it has said it will pay the dues. However, the DoT has not taken a call on the written request.

A senior industry executive said, “Vi has informed the Division of Telecommunications (DoT) that it’ll make payments of LF and SUC for 3 quarters, together in April-May and if there are penalties imposed, will clear them as well".

Since the government has issued a series of relief measures, the request has incidentally surprised DoT officials. However, the 4-year moratorium that Vi opted for last month only applies to retrospective dues. Therefore, it will have to pay the present LF and SUC as applicable. Notably, the telco has to pay about Rs. 2,000 crore per quarter. However, this amount changes with the AGR of the quarter in question.

Vodafone Idea has been struggling financially since its inception in 2018. Though set to announce Q2 results today, the telco has not registered a profitable quarter. What's more, it has accumulated a debt of almost Rs. 2 trillion, most of it due to the government in statutory dues. Therefore, the moratorium will give Vodafone Idea much-needed short-term respite; the telco can save as much as Rs. 1 trillion over the next 4 years.

However, Vi still needs cash immediately. It has liabilities of Rs. 12,000 crores coming up over FY23, most of it in the form of NCD. Including the SUC and LF dues, this amount triples to Rs. 36,000 crore over the entire fiscal. Apart from these liabilities, the telco still needs more cash to invest in its 4G network and compete with Airtel and Jio. With 5G auctions coming up within the next 6 months, Vi might find itself unable to compete.

Vi has been trying to raise Rs. 25,000 crores via outside investors since September 2020; so far, the telco has failed to raise anything.