In a letter dated April 3 to the Department of Telecommunications (DoT), Vi proposed a softer payment plan, citing continuing liquidity challenges in absence of its long-pending fundraising and sought the government’s support to stagger pending licence fee payments for the January-March period to minimise operational continuity risks and also balance interests of all stakeholders.
ET has seen a copy of the letter.
“Vi is facing liquidity challenges for (the) past several quarters… (and) till the time funding is in place, it’s important to have continued support from all stakeholders, including the DoT and vendors,” said the letter.
Vi, a JV between the UK’s Vodafone Plc and India’s Aditya Birla Group, was required to pay the licence fee for the fourth quarter of 2022-23 by March 25.
No Mention of Delaying SUC Dues
But the loss-making telecom operator has paid only 10% of the total sum and proposed to pay the balance 90% in multiple instalments – 20% by May 31, another 20% by June 30 and the final 50% by July 31. It has offered to pay interest for such delayed payment as per the licence agreement.ET’s queries to Vi remained unanswered till press time on Friday.
Vi’s payments towards licence fees in the previous two quarters ranged between Rs 600 crore and Rs 800 crore, according to people aware of the matter.
At present, telcos pay 8% of their adjusted gross revenue (AGR) as licence fees to the government. Underpayment of statutory dues can result in a penalty.
Vi said in its letter that despite its continuing liquidity challenges, the company has paid all statutory dues till the second quarter of 2022-23 and is now clearing licence fee and spectrum usage charge (SUC) dues for the third quarter of last fiscal at a faster pace than the earlier committed payment plan.
“Vi is working towards arranging new funding, which will allow the company to make right investments to improve cash generation from its operations,” the telco said in its letter to the DoT.
But in its letter, there was no mention of the company delaying SUC payments in the March quarter. Vi’s quarterly SUC payout is estimated to average about 1% of AGR – down from 3-4% of AGR earlier – after the government stopped charging this statutory fee on airwaves acquired from last year’s 5G auction onwards.
Vi told the DoT in the April 3 letter that all its vendors (tower companies and network gear suppliers) had supported it during this challenging period, enabling the telco to service its debt obligations. But this, it said, had led to a significant accumulation of vendor dues.
Vi requires a fresh capital infusion from its promoters, which is expected to lead to third-party equity funding. That would also trigger the much-needed investments in Vi’s 4G network and towards its pending 5G rollout.
Vi’s promoters have been widely expected to infuse around Rs 5,000 crore of fresh capital in tranches after the government converted the telco’s accrued interest towards AGR arrears into equity in February this year and became its biggest shareholder with a 33.1% stake.
But that hasn’t happened yet, which has resulted in lenders delaying refinancing of part of its existing bank debt. According to company data, Vi’s debt from banks and financial institutions stood at Rs 13,190 crore in the quarter ended December 2022. Of this, debt payable by December 31, 2023, is Rs 8,032.8 crore.
Vi’s rivals, Bharti Airtel and Reliance Jio already have a headstart on the 5G front, having covered more than 500 cities and towns. Vi hasn’t yet announced a launch timeline due to pending vendor dues. But it needs to roll out 5G quickly, according to analysts, since its customer losses would mount as rivals expand similar services.
Vi ended the December 2022 quarter with Rs 2.22 lakh crore net debt and a modest cash balance of Rs 160 crore. Besides bank debt, its trade payables – reflecting arrears to vendors such as tower companies and gear suppliers – were Rs 14,728.6 crore. The rest were mainly spectrum and AGR-related dues to the government.
