Vodafone Idea urges DoT to issue Rs 15,000 crore bank guarantees
By CEOInsights Team, 0
“Vodafone has expressed the need to release bank guarantees since the AGR dues themselves have been deferred by four years,” a senior government official told. “The company also wishes that the date of the apex court order in favour of the government be frozen as the date till which to compute the AGR dues.”
Vodafone Idea’s contention is that since the government’s relief package has allowed the company to pay its AGR dues after four years and also secure the repayment through an option to convert the principal due amount into further government equity in the company, there was no need to keep holding onto the bank guarantees, the official said, explaining the carrier’s point.
The telco has told DoT that its potential investors were seeking these finer details as the loss-making telco races to tie up external funding by its self-mandated March end deadline. Vi’s board is scheduled to meet in March 3 to consider its fund raising options.
The DoT, in its affidavits to the government, has pegged Vi’s AGR dues at around Rs 58,254 crore. This included licence fees and spectrum usage charge (SUC) demands calculated up to FY2016-17. On these outstanding amounts, interest, penalty and interest on penalty was calculated up to October 2019, the government has said.
Of its dues, Vi has already paid over Rs 7,854 crore.The operator, in its October December earnings statement, though pegged its AGR dues at Rs 64,620 crore, factoring in additional interest and penalty calculations on top of DoT’s computations for the interim period.
The government as part of the telecom relief package announced in September had allowed telcos to defer spectrum as well as adjusted gross revenue(AGR) dues by four years, to be repaid with interest. It had also cut BG requirements against statutory dues such as licence fees by 80%. The official added that the DoT is “examining” Vi’s request.
The DoT though has already started to return some BGs. Report indicated long back that the department has returned BGs worth around Rs 2,500 crore and Rs 4,000 crore to Vi and Airtel, respectively. Vi has said that at any time, the DoT has some Rs 23,000-25,000 crore worth of BGs furnished by the telco.
Return of BGs will add to the banks’ capital pool, allowing a cash-strapped telco like Vi access to more loans as it seeks to invest in its 4G network to better compete with stronger rivals Reliance Jio and Bharti Airtel, and stem its subscriber losses. It also needs capital to take a meaningful part in the upcoming 5G spectrum auctions.
Vi, with a cash balance of Rs 1,500 crore and net debt of Rs 1.97 lakh crore at December-end, has been in talks with a slew of private equity players such as US-based Apollo Global and Carlyle for around $1 billion in equity and debt funding, as it looks to turn around operations. Its promoters UK’s Vodafone Group Plc and Aditya Birla Group(ABG) are also set to participate in the equity fund raising.
Last week, the Vodafone Group sold a 2.4% stake in Indus Towers through a block deal, raising over Rs 1,400 crore. It will also sell another 4.7% stake to Bharti Airtel, which may potentially net it under Rs 3,000 crore. The proceeds from these sales are set to be infused into Vodafone Idea. ABG chairman Kumar Mangalam Birla is also expected to invest around $200 million of his own capital into Vi.
Meanwhile, Vi is also considering the sale of overseas convertible bonds to raise $750 million to $1 billion(Rs 5,550-7,400 crore) at the earliest. The operator has appointed SBI Capital Markets to negotiate the restructuring ofloans worth Rs 20,000-23,000 crore that the telco is due to repay within the next four years.
The DoT though has already started to return some BGs. Report indicated long back that the department has returned BGs worth around Rs 2,500 crore and Rs 4,000 crore to Vi and Airtel, respectively. Vi has said that at any time, the DoT has some Rs 23,000-25,000 crore worth of BGs furnished by the telco.
Return of BGS will add to the banks’ capital pool, allowing a cash-strapped telco like vi access to more loans, as it seeks to invest in its 4g network to better compete with stronger rivals
Return of BGs will add to the banks’ capital pool, allowing a cash-strapped telco like Vi access to more loans as it seeks to invest in its 4G network to better compete with stronger rivals Reliance Jio and Bharti Airtel, and stem its subscriber losses. It also needs capital to take a meaningful part in the upcoming 5G spectrum auctions.
Vi, with a cash balance of Rs 1,500 crore and net debt of Rs 1.97 lakh crore at December-end, has been in talks with a slew of private equity players such as US-based Apollo Global and Carlyle for around $1 billion in equity and debt funding, as it looks to turn around operations. Its promoters UK’s Vodafone Group Plc and Aditya Birla Group(ABG) are also set to participate in the equity fund raising.
Last week, the Vodafone Group sold a 2.4% stake in Indus Towers through a block deal, raising over Rs 1,400 crore. It will also sell another 4.7% stake to Bharti Airtel, which may potentially net it under Rs 3,000 crore. The proceeds from these sales are set to be infused into Vodafone Idea. ABG chairman Kumar Mangalam Birla is also expected to invest around $200 million of his own capital into Vi.
Meanwhile, Vi is also considering the sale of overseas convertible bonds to raise $750 million to $1 billion(Rs 5,550-7,400 crore) at the earliest. The operator has appointed SBI Capital Markets to negotiate the restructuring ofloans worth Rs 20,000-23,000 crore that the telco is due to repay within the next four years.