Debt-ridden Vodafone Idea has moved the government seeking relief in its Rs 7 trillion adjusted gross revenue (AGR) outstanding after the Supreme Court rejected the company’s relief petition seeking revision in the computation of its statutory arrears and waiver of penalty and interest, a company official said.
VIL Chairman Ravinder Thakkar said during the company’s investors conference call on the Rs 3 trillion contract awarded to Nokia, Ericsson and Samsung for supply of 4G and 5G telecom equipment that the company has been in negotiations with government officials before and even after the court’s verdict.
“There was an expectation that the court would consider the petition but the fact that the court did not do so means that in a way the action and the responsibility lies with the government. The government has then asked us to come up with a comprehensive view on appropriate mechanisms and requests that we can make to address this issue,” Thakkar said.
The government holds 23.2% stake in VIL, while promoters Aditya Birla Group and Vodafone hold 37.3% stake in the company.
Thakkar said it had been clearly agreed with the government that VIL would not have to pay anything that resulted from the miscalculation.
“We are currently finalizing these requests and will be discussing these requests with the government again in the coming days. The government has been very committed to the three strong private companies and will continue to be very committed to them. We look forward to further discussions with the government and working with them to find a solution to this challenge,” Thakkar said.
VIL payment obligations to the government stood at Rs 2,09,520 crore as on June 30, 2024, which includes deferred spectrum payment obligations of Rs 1,39,200 crore and AGR liabilities of Rs 70,320 crore.
VIL CEO Akshaya Moondra said the company had rectified its mistake and the Supreme Court had dismissed its revision petition seeking waiver of penalty and interest.
He said that according to the Supreme Court, the petition does not fulfil the criteria laid down for granting a medical petition.
“While the merits of this case were not discussed, I would like to assure you that a positive outcome would reduce our overall debt and enable us to resolve it more quickly, but would not impact our long-term business plan and turnaround strategy.”
“While the outcome of the curated petition is disappointing, it has no impact on the company’s long-term business plans or existing liabilities,” Moondra said.
He said the company has also submitted a growth plan to the bank for borrowing.
Moondra said he expects the bank debt to come in within the next seven to eight weeks and will use it to fund network expansion. The company is in talks with new lenders to raise Rs 25,000 crore in equity and Rs 10,000 crore in non-equity based loans or letters of credit, he said.
He said one of the major steps in the debt fundraising process is the completion of a techno-economic assessment by an independent third party engaged by SBI.
“The evaluation was recently completed and the report has been submitted to all banks and financial institutions which will eliminate the need for them to go through their own internal evaluation and approval process. We expect disbursement of funding to banks to be completed in the next seven to eight weeks,” Moondra said.
VIL has signed contracts worth around Rs 3 trillion to supply 4G and 5G telecom network equipment to Nokia, Ericsson and Samsung for three years.
Moondra said supplies of the equipment are expected to begin by the end of next quarter with large-scale deployment expected by the end of this financial year.
The company has earmarked Rs 50,000-55,000 crore for network expansion. VIL said it would initially fund the capital expenditure from the recently raised Rs 24,000 crore and is in discussions with banks for the remaining.
