Telecom company Vodafone Idea Limited (VIL) has approached the Indian government for relief concerning its massive Adjusted Gross Revenue (AGR) dues. After the Supreme Court dismissed its curative petition seeking corrections in the calculation of statutory dues and waivers on penalties and interest, VIL is now turning to the government for assistance. The company’s total AGR dues amount to around ₹70,000 crores.
Discussions with Government Officials in Full Swing
During a recent investor call about the company’s ₹30,000 crore deal for 4G and 5G telecom equipment, VIL Chairman Ravinder Takkar shed light on the ongoing discussions with senior government officials. These talks started even before the court’s decision and have intensified after the rejection of the curative petition.
Takkar expressed disappointment that the court didn’t consider the company’s plea but emphasized that the responsibility to find a solution now lies with the government. According to Takkar, the government has shown an openness to discussing a comprehensive plan to address Vodafone Idea’s financial challenges. He added that the company will soon present its requests and seek further discussions to find an effective resolution.
Ownership and Shareholding
Vodafone Idea’s ownership is divided among various stakeholders. The Indian government currently holds a 23.2% stake in the company, while the majority stake (37.3%) is held by the promoters, Aditya Birla Group, and Vodafone. Takkar highlighted that the government understands Vodafone Idea should not bear the financial burden resulting from calculation errors. The company is working on putting together detailed requests and hopes to re-engage with the government soon to negotiate a fair resolution.
Vodafone Idea’s Mounting Payment Obligations
As of June 30, 2024, Vodafone Idea’s total payment obligation to the government stands at a staggering ₹2,09,520 crore. This includes deferred spectrum payment dues of ₹1,39,200 crores and AGR liabilities amounting to ₹70,320 crore. The company’s CEO, Akshay Mundra, also addressed the Supreme Court’s rejection of the curative petition, explaining that it failed to meet the criteria for reconsideration.
Mundra noted that while the court’s decision is a setback, Vodafone Idea is determined to continue discussions with the government to explore alternative solutions. The company remains hopeful that the government will cooperate in finding a way to address the financial burden.
Major Equipment Deal for 4G and 5G Expansion
In a major move to boost its network infrastructure, Vodafone Idea has awarded contracts worth approximately ₹30,000 crores to leading telecom equipment suppliers Nokia, Ericsson, and Samsung. The deal, set to span over three years, will focus on the supply of 4G and 5G telecom network equipment. This is part of Vodafone Idea’s broader plan to invest between ₹50,000 crores to ₹55,000 crore in expanding its telecom network.
The initial funding for this capital expenditure will come from the recently raised ₹24,000 crores. Additionally, the company is in talks with banks to secure financing for the remaining amount required for the expansion.
Vodafone Idea’s efforts to expand its network capabilities come at a critical time when the company is looking to regain market share in India’s competitive telecom landscape. Despite its financial challenges, the company is committed to improving its service offerings and staying relevant in the 5G era.
