Voda Idea to clear Q4 dues by next week

Vodafone Idea Ltd (VIL) is likely to clear its remaining licence fee dues for the fourth quarter of the previous fiscal by early next week and will reply appropriately to the telecom department's show-cause notice.

“The bulk of the payment has gone already and a gap will be paid by next week,” a senior company executive told ET. “We will respond (to the notice) accordingly, most likely on Monday.”

The payment was due on March 25 as per a show-cause notice that was sent by the Department of Telecommunications (DoT) to India's only loss-making telco on April 7. DoT sought to know why action should not be taken against the telco for violating licence conditions by not paying dues on time. Under the rules, DoT can invoke the telco's bank guarantees and even cancel its licence for flouting licence conditions. ET has seen a copy of the notice.


Another Vodafone executive said that company actually had time until April 15 to make the payment.

“The notice was shocking since there is already a grace period,” he said. “We will respond to the notice.”

Fund-raising Delays
The development comes amid delays in the cash-strapped telecom operator's efforts to raise funds.

Talks to secure $2-2.5 billion (₹14,500-18,100 crore) via convertible instruments from an Oak Hill-led consortium went sour. Efforts to reach out to private equity firms such as KKR have also not yielded any results so far.

Due to competitive pressures, the carrier has been unable to increase tariffs, which would have strengthened its financials. The ongoing non-payment of licence fee issue reflects the company’s financial situation, experts said.

As per the DoT notice issued on April 7, the struggling telecom operator has not paid licence fees for seven circles — Bihar, Gujarat, Jammu & Kashmir, Kerala, Maharashtra, Uttar Pradesh (East) and Orissa — along with fees for national long distance licences.

The telecom department had sought an explanation by April 12. Licence fees have to be paid in four quarterly instalments during the financial year, according to the Unified Licence Agreement.

For the same quarter of the previous year, the telecom operator had paid ₹1,367 crore as licence fees and spectrum usage charges, while for the first quarter of this fiscal (April-June), it paid ₹1,200 crore.

The telco needs cash urgently to strengthen 4G operations in its 16 priority circles to fight financially stronger adversaries Bharti Airtel and Reliance Jio, arrest the steady loss of subscribers and also clear statutory dues to the government.

Vodafone Idea lost 2.3 million wireless users in January while Bharti Airtel and Reliance Jio Infocomm gained 5.9 million and 2 million users, respectively.

As of January 2021, Reliance Jio topped wireless subscriber numbers with a base of 410.7 million, followed by Airtel’s 344.6 million and Vodafone Idea’s 281.9 million, as per regulatory data. Besides capex, Vodafone Idea has ₹50,400 crore of adjusted gross revenue (AGR) dues payable to the government over 10 annual instalments through March 31, 2031.