Vodafone Idea defers AGR dues payment of ₹8,837 crore

Cash-strapped telecom operator Vodafone Idea has decided to defer the payment of additional adjusted gross revenues (AGR) dues worth ₹8,837 crore by a period of four years.

The board of directors of the company at its meeting held on June 22, 2022, has approved the exercise of the option of deferment of the AGR related dues by a period of four years with immediate effect, the telecom operator says in an exchange filing.

Vodafone Idea says the Department of Telecommunications (DoT) has offered the company a moratorium of four years for all AGR related dues up to financial year 2018-19, which were not included in the Supreme Court order dated September 1, 2022.

The DoT letter also provides the company an option for equity conversion of interest dues upfront for these AGR related dues for which a period of 90 days has been provided, the company says.

The amount of the AGR related dues is ₹8,837 crore, which is subject to revision on account of disposal of various representations, CAG, special audit and any other outcome of litigation, the telco says, adding that the final amount is to be paid in six equal annual instalments post moratorium period starting from March 31, 2026.

In a separate filing, Vodafone Idea said that its board has approved raising of ₹436.21 crore from Vodafone Group company Euro Pacific Securities through issue of preferential share at a unit price of ₹10.2 apiece or warrants at the same price.

The board also approved convening of an extraordinary general meeting (EGM) of the company on July 15, 2022, to seek approval of shareholders for the preferential issue.

Fortune India last month reported that the company's gross debt (excluding lease liabilities and including interest accrued but not due) as of March 2022 is ₹ 1.97 lakh crore. Of this, the dues to the government comprise deferred spectrum payment obligations of ₹1.13 lakh crore and AGR liability of ₹65,950 crore and ₹18,070 crore in dues to banks and financial institutions.

Even as the debt overhang remains, Vi's average revenue per user improved in Q4 to ₹124, up 7.5% quarter on quarter compared with ₹115 in Q3 FY22, aided by the tariff hikes in November 2021.

The management is looking to further boost its ARPU to ₹200 in the short term and eventually to ₹250 in the long term. However, the company’s subscriber base declined to 243.8 million in Q4 compared with 247.2 million in Q3 FY22, primarily owing to the tariff increase. Of the overall subscriber base, 4G users are 118.1 million, with the company onboarding 1 million new customers during the fourth quarter.

During the year, Vi incurred a capex of ₹449 core against ₹415 crore spent in FY21. A chunk of the spend was on increasing the company’s 4G coverage and capacity. But going ahead, the company will need to raise more equity to fund its expansion and bid for the 5G spectrum.