Vi requests govt to convert AGR and spectrum dues Into equity

Telecom service provider Vodafone Idea is seeking further support from the government, as it is finding it challenging to repay adjusted gross revenue or AGR and spectrum dues.

A letter addressed to telecom secretary Neeraj Mittal was sent on March 11, where Vodafone Idea has requested government to convert more of its dues into equity.

If the government agrees to convert more dues to equity, its stake in Vodafone Idea will rise to 49% from the current 22.6%, according to people familiar with the matter.

The company is seeking a solution for Rs 36,950 crore worth AGR and spectrum dues, as they have to immediately pay Rs 13,089 crore in the next few weeks, the people quoted above said.

The troubled telecom operator had clearly said that it does not have the ability to repay the dues and has sought relief under the 2021 Telecom Relief Package.

Notably, while the government stake in the company originally was 33.44%, the stake has since fallen due to Vodafone Idea’s Rs 18,000 crore follow on public offer in April last year. As of December, the government stake in Vodafone Idea stands at 22.6%.

The letter came on the heels of news reports that the government has declined to provide any waiver on AGR dues for telecom companies. NDTV Profit had previously reported that the government was considering a proposal to reduce the quantum of AGR dues payable to the government.

For Vodafone Idea Ltd., this could mean a potential relief of Rs 52,000 crore, reducing about 75% of its outstanding AGR liability and roughly 25% of its total debt, equivalent to potential upside of Rs 7 per share for Vodafone Idea’s equity, analysts had estimated in January.

In July 2024, Vodafone Idea had sought to list a curative plea at the Supreme Court on the AGR dues case. The telecom operator was seeking a limited reconsideration of the judgement that held India’s telecom operators will have to include non-core revenue to calculate their adjusted gross revenue.

In September 2024, the Supreme Court however dismissed Vodafone Idea’s plea in the matter, dealing a severe blow to the telecom company.

While addressing a post earnings call in February, Vodafone Idea’s Chief Executive Officer Akshaya Moondra had expressed optimism about the government’s stance on the telecom sector’s requests on AGR dues.

“The government’s intent is clear that it will provide support if need arises. Moreover, it is cognisant that support will be required on this issue. The government is the biggest stakeholder in this process; therefore, we are confident that a solution will be found,” Moondra had said.

VIL’s consolidated net loss narrowed in the October-December quarter. The telecom firm posted a loss of Rs 6,609 crore in the period in comparison to Rs 7,175.9 crore in the preceding quarter.

This latest request from the government adds to a long history of government support that Vodafone Idea and its Indian promoter Aditya Birla group has sought.

In a June 2021 letter, Aditya Birla group’s patriarch, Kumaramangalam Birla sought intervention from the government, as Vodafone Idea was staring at a severe funding crunch. Birla had offered to to hand over his stake in the company to any entity that the government may consider worthy.

In February 2023, the Vodafone Idea board decided to issue 33.44% stake to the government worth Rs 16,133 crore. The government had decided to do this conversion on the condition that Vodafone Idea would bring in the necessary fund infusion. NDTV Profit