With the Centre agreeing to convert part of the debt into equity, Vodafone Idea has presented its business plans and future plan of action to banks in a bid to secure funding.

Vi’s funding plans had stalled for the past two months as the Centre kept delaying converting the company’s debt worth ₹16,000 crore to equity. However top company officials told analysts in the Q3FY23 investor call on Wednesday, that the company’s fundraising discussions have evolved in a positive direction once the Centre has converted its dues to equity.

While the company has been silent on its capex plans for 5G so far, Vodafone Idea CEO Akshaya Moondra said that investment in 5G is part of the company’s plan, however, capital expenditure will only materialise once Vi’s funding plans become clear. While the company is going to start 5G services later than its competitors, Bharti Airtel and Jio — according to Moondra, at this early stage of 5G deployment, Vi is not seeing significant subscriber churn which can be attributed to delay in deploying 5G services. 

mounting pressure

Network vendors, especially tower companies Indus and ATC were mounting pressure on Vi in December-January to repay its dues as Centre’s equity conversion was not materialising. However, according to Vi spokespeople, the pressure has also reduced after the equity conversion by the government. The company will be clearing the backlog on these payments once they make network investments which can bolster revenues for the company. 

Vi also has pending license fee payments with the DoT, the company executives said that they have asked the government for delayed payment plan for these dues.

Moondra also added that it will be better for the industry if future tariff hikes are taken on unlimited data plans, where subscribers are charged for additional data usage. Currently, operators are trying to increase ARPUs by eliminating entry-level data packs. However, according to Moondra, future tariff hikes should be taken in the mass 4G segment that overuses unlimited data plans.

The telecom operator will be paying annual instalments of ₹43,000 crore in spectrum and AGR payments once the Centre’s moratorium is over. Vodafone Idea will have to start repaying its dues to the Department of Telecommunications from September 2025. While the Centre allowed Vi to defer its spectrum and AGR payments for four years till FY25 – this will translate to annual payments of ₹7,400 crore for AGR and ₹10,000 crore for spectrum on these deferred amounts after the moratorium is over. In addition to this, Vi also has to make regular instalments of ₹9,100 crore for AGR and ₹16,500 crore for spectrum from September 2025. Thus the company will be making annual payments of ₹43,000 crore to the Centre once the moratorium is over. 

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