MUMBAI:
Vodafone Group Plc is likely to inject Rs 285 crore (35 million euros) more into its India telecom JV -
Vodafone Idea - by September, as per a pre-agreed mechanism. The UK group also raised concerns regarding Vodafone Idea's ability to generate cash to settle or refinance its liabilities and guarantees, including those related to its adjusted gross revenue (AGR) dues.
".... the Group has assessed a cash outflow of €235 million under the agreement to be probable at this time and provided for this amount at 31 March 2020. On 22 April 2020, the Group announced that it had made an advance payment of USD 200 million to Vodafone Idea for amounts that are likely to be due in September 2020 under the terms of this mechanism," said the company in a statement on Tuesday.
The second tranche will help the telco meet some of its opex or capex needs. The carrier also faces AGR based dues to the government.The carrier has paid Rs 6,854 crores so far against the government demand of Rs 58,254 crore. Vodafone Group though has estimated the liabilities at around Rs 51,400 crore.
At the time of injecting the earlier Rs 1,530 crore ($200 million) in April, the group had said the accelerated payment was to provide the Indian telco with liquidity to manage its operations amidst Covid -19 crisis.
The UK based telco on Tuesday confirmed that its exposure to India business is Rs 84,000 crore (one billion pounds).
"The Group’s potential exposure under this mechanism is capped at Rs 84,000 crore (€1.0 billion) and any cash payments or cash receipts relating to these contingent liabilities and potential refunds must have been made or received by Vodafone Idea before any amount becomes due from or owed to the Group," said the telecom group in its statement on Tuesday.
The Vodafone Group, Aditya Birla Group and
Idea Cellular agreed that the Vodafone Group and Vodafone Idea would reimburse each other on set dates for certain identified pre-merger liabilities and assets that could crystallise in future. Vodafone Group’s potential exposure under this mechanism is limited to Rs 8,400 crore (1.1 billion euros).
But the telecom behemoth has again raised its concerns over the Indian venture struggling under the AGR crisis. "Significant uncertainties exist in relation to Vodafone Idea’s ability to generate the cash flow that it needs to settle, or refinance its liabilities and guarantees as they fall due, including those relating to the AGR judgement," it stated.
The AGR case on modality of payment between the telcos and the government is with the Supreme Court. The Group in its preliminary results said it made a loss of of €0.5 billion for FY20. "Vodafone's share of losses related to Vodafone Idea (€2.5 billion) is principally due to adverse legal judgments by the Supreme Court in India and the Group carrying value of Vodafone Idea has been reduced to €nil".
The Group said it has also extended the long stop date on our agreement to merge Indus Towers and
Bharti Infratel to 24 June 2020. Vodafone Idea currently holds 11.15% in Indus Towers and may raise Rs 4,000-4,500 crore by selling its stake in the merged Indus Towers- Bharti Infratel entity.