Vodafone Idea Ltd on Thursday paid its entire licence fee dues for the quarter ended June 30, offering hope to investors that the company may yet avoid a collapse if the government comes out with a rescue package for the struggling industry.
While the company did not specify the amount, a spokesperson for the company said that the telecom operator has paid the entire outstanding dues for the quarter.
While the amount is likely minuscule when compared to its total dues of ₹22,500 crore that it needs to settle between December and April to repay a mix of regular debt to lenders, AGR (adjusted gross revenue) and spectrum dues, analysts said that the development does add to its survival hopes.
Vodafone Idea has a total liability of ₹1.92 lakh crore. Out of this, it owes ₹58,000 crore to the government as AGR dues. The rest of the amount includes spectrum-related dues and bank loans.
In August, Kumar Mangalam Birla stepped down as the chairman of Vodafone Idea, a post he had held since Idea Cellular‘s merger with Vodafone India in 2018.
Birla’s stepping down was widely viewed as an attempt to distance himself from the company.
In a letter to the cabinet secretary in June, Birla offered to hand over Aditya Birla group’s stake in the telco to the government or a government-approved entity, citing the company’s dire financial situation, which he warned made the company’s collapse imminent in the absence of a bailout.
In July, the Supreme Court dismissed the telecom operator’s plea to allow payment of self-assessed AGR dues that are way lower than that demanded by the telecom department.
With the judgement going against it, the company’s fundraising plans came to a grinding halt.
Mint reported on July 23 that several investors who were exploring an investment in the company backed away from talks as the funds’ infusion was contingent on the Supreme Court allowing the company to pay recomputed AGR dues, which would have eased the burden on the telecom service provider to a large extent.
On August 10, the company approached the Supreme Court once again, seeking a review of its July 23 order.
In its review petition, it has said it is “a travesty of justice” that the company is restrained from questioning the arithmetical errors/omissions which are going to cost it about ₹25,000 crore ( ₹5,932 crore of principal plus interest, penalty and interest on penalty).
Vodafone Idea petition has said its contentions have been rejected by the order under review and added that this denial could result in the company going under and its about 273 million subscribers being left “high and dry”.
Other fallouts include loss of investment in the business and an impact on livelihoods of employees, as well as distributor, retailers, and store staff, the company said in the petition.
During an earnings call earlier this week, Vodafone Idea chief executive Ravinder Takkar said the telecom company is hopeful that the government will offer the necessary support to address structural issues in the sector and emphasized that setting a minimum industry-wide tariff, even if it is a temporary measure, could go a long way in helping the struggling telecom operators.
Vodafone Idea had posted a narrower consolidated loss of ₹7,319 crore for the quarter ended June 30 from ₹25,460 crore in the year-ago period.
Revenue from the telco’s operations declined by 14% to ₹9,152.3 crore from ₹10,659.3 crore in the year earlier period.
Total gross debt (excluding lease liabilities and including interest accrued but not due) as of June 30 stood at ₹1.92 lakh crore.
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