If it’s not capable of safe aid from large authorities dues, this may very well be Vodafone Concept’s final operational fiscal within the nation, the telecom operator has instructed the Supreme Courtroom. That will imply that the federal government’s 49 per cent fairness within the firm may additionally “lose (its) worth”.
In search of a waiver on curiosity, penalty, and curiosity on penalty — collectively value over Rs 45,000 crore — on its Rs 83,400 crore pending adjusted gross income (AGR), the corporate mentioned that the staggering dues have been stopping it from elevating extra funding. This, regardless of the federal government changing an extra Rs 36,950 crore value of the corporate’s dues into fairness in March.
Vi is among the many three privately-owned telecom operators within the nation, with the federal government seemingly intent on protecting India’s telecom ecosystem a three-horse race. Nonetheless, Vi’s precarious monetary state of affairs raises considerations about its longevity available in the market.
Why Vi is elevating survival fears
In its petition filed within the Supreme Courtroom, looking for a waiver on its dues, Vi mentioned, “with out financial institution funding, (Vodafone Concept) will be unable to function past FY 2025-26, because it doesn’t have the flexibility to pay AGR instalment of approx. Rs.18,000 crore as per DoT calls for due in March 2026”.
The corporate mentioned that with out this funding, its deliberate investments won’t occur and any hopes of an enchancment in its operational efficiency can be dashed.
“Extra importantly, the funds raised by (Vodafone Concept) can be utilised quickly and your complete capex cycle will come to a halt. In such a case, your complete fund elevating carried out over final 12 months and investments made to this point by the corporate, as additionally the fairness stake of the Authorities together with the latest conversion, will lose worth,” Vodafone Concept warned in its petition.
“It’s inconceivable for the promoters or any shareholder to take a position any extra monies within the firm. For the reason that (firm) is unable to boost debt in view of precarious financials, whether it is compelled to pay quantity of Rs. 18,000 crore per 12 months in direction of AGR dues for subsequent 6 years, the Petitioner will be unable to outlive and can face excessive monetary stress,” Vodafone Concept added.
Authorities lifeline
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Vodafone Concept finds itself at this juncture regardless of receiving a lift from the federal government earlier this 12 months.
The Indian authorities now owns near 49 per cent of the beleaguered telecom firm, after it acquired one other lifeline from the Centre, which transformed an extra Rs 36,950 crore value of the corporate’s dues into fairness in March. Earlier than this infusion, the federal government held practically 23 per cent within the firm. The federal government is now the single-largest shareholder within the telecom agency. Because of present authorized obligations, the federal government had acquired these extra shares at a premium of greater than 47 per cent on the time.
This was the second lifeline that the federal government has provided to the struggling telco. As a part of its 2021 aid package deal for the corporate, the federal government in February 2023 had permitted the conversion of Rs 6,133 crore of Vi’s curiosity dues into fairness.
As on December 2024, Vodafone Concept’s whole debt was round Rs 2.3 lakh crore. Of this, Rs 77,000 crore was AGR (adjusted gross income) legal responsibility and Rs 1.4 lakh crore is the spectrum legal responsibility.
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The fairness conversion was carried out for the corporate to have the ability to pay a part of its spectrum dues to the federal government. With out the transfer, the corporate’s must pay round Rs 40,000 crore as a yearly instalment after the moratorium expires in September this 12 months.
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