Unable to generate enough cash, Vodafone Idea is scouting for funds and had recently approached the telecom department for an extension of the two-year moratorium on paying spectrum fees by one more year. However, telecom officials believe a moratorium cannot be for one company, and has to be for the entire sector.
In its regulatory filing, Vodafone Idea revealed it is exploring various opportunities and options to raise funds within the authorizations given by its board. According to Asia Times, the company is also looking to sell its fixed-line broadband subsidiary, optical fiber unit and data centers business to raise around $1 billion in order to meet its liabilities. The company plans to sell the land bought to set up data centres.
Vodafone Idea has a payment obligation towards adjusted gross revenue tax to be paid to the telecom department as mandated in 2019 by the Supreme Court. Moreover, the loss-riddled is required to pay Rs 584 billion, of which it has, so far, paid Rs 78.54 billion. In September 2020, the court ruled that telecom operators must pay 10% of the total dues as demanded by the telecom department by March 31, 2021 and the remainder in equal installments every financial year up to March 31, 2031. As such, Vodafone Idea has filed pleas in the Supreme Court seeking recalculation of the adjusted gross revenue dues.
During the January-March quarter, Vodafone Idea had posted a whopping loss of Rs 70.23 billion. This loss has widened significantly compared with Rs 45.40 billion in the preceding quarter. Moreover, the company’s revenues slipped sharply, nearly 12% on a quarter-on-quarter basis to Rs 96.08 billion.
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According to the Telecom Regulatory Authority of India (TRAI), Vodafone Idea lost over 1.8 million users in April. Its subscriber base dwindled to 280 million. Its competitors, mainly Reliance Jio has added 4.75 million users during the month with a subscriber base of 427.6 million; Bharti Airtel has 517,000 users and a subscriber base of 352.9 million. The service provider has attributed its financial condition to the Indian telecom industry.
It has to be noted that India’s telecom industry is in massive debt, and operators have refrained from increasing tariffs because of the hyper-competitive environment. The Government has been proactive in its efforts to transform India into a global telecommunication hub. As such, the Union Cabinet approved Rs 12,195 crore production-linked incentive (PLI) scheme for telecom and networking products under the Department of Telecom.
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