Debt-ridden Vodafone Idea has sought 30 days more time to pay around Rs. 1,680 crore for spectrum auction instalment due on Thursday, a senior company official said on Wednesday. The company has proposed to pay the amount with interest.
"We have submitted a letter to DoT that we propose to pay the spectrum auction instalments of Rs. 1,680 crore towards the 2022 auction, which is due on August 17, by availing the grace period of 30 days with interest, in accordance with the terms of NIA (Notice Inviting Applications)," Vodafone Idea chief financial officer Murthy GVAS said during the earnings calls.
The development comes even after one of the promoters has confirmed to the company that it will provide direct or indirect financial support to the extent of Rs. 2,000 crore in the event of any fund requirement for meeting impending payment obligations.
The company has also acquired a 5G spectrum in mid-band (3300 megahertz) and millimetre wave in the 26 GHz band in July 2022 spectrum auction.
Vodafone Idea Chief Executive Officer Akshaya Moondra during the call said that the company's discussion with investors and banks has progressed well and expects to close funding in the coming quarter.
"We are making good progress and expect to conclude these discussions in the coming quarter. That is as far as the equity funding is concerned. As far as debt funding is concerned, we have been engaged with a consortium of banks for a long time. Generally, their ask is that equity also needs to be tied up...we expect to conclude these funding arrangements in the coming quarter," Moondra said.
He said that one of the promoters has given assurance of Rs. 2,000 crore for payments. Still, there is a need to get external funding. Vodafone Idea's consolidated net loss widened to Rs. 7,840 crore in the first quarter ended June 30.
The consolidated revenue from operations during the reported quarter increased marginally by 2.3 percent to Rs. 10,655.5 crore from Rs. 10,406.8 crore in June 2022 quarter.
The total gross debt (excluding lease liabilities and including interest accrued but not due) as of June 30, 2023, stood at Rs. 2,11,760 crore, comprising deferred spectrum payment obligations of Rs. 1,33,740 crore, and AGR liability of Rs. 66,860 crore that is due to the government.
Debt from banks and financial institutions stood at Rs. 9,500 crore, and money raised through debt instruments stood at 1,660 crore.
With cash and cash equivalents of Rs. 250 crore, the net debt stood at Rs. 2,11,510 crore.
The total subscriber base of VIL declined to 22.14 crore at the end of June 2023 from 24 crore a year ago.
Moondra said that to arrest the complete decline in customer base, the company needs to expand 4G coverage and invest in 5G technology.
The company has had an accumulation of vendor payments, which it expects to start unwinding from the next quarter, he added.
"Once we are through with this quarter and we are able to manage our payments through the support of promoters and non-operational cash inflows that we are looking at, we will then be able to manage and kind of start unwinding vendor dues from next quarter," Moondra said.
He pointed out that the current level of mobile service rates needs to go up for customers using higher levels of data.
"Today, we are equalising the price for somebody who is using 5-6 GB to 28 GB per month now that is where we believe it is not the correct structure," Moondra said.
VIL's average revenue per user (ARPU)-- a key growth matrix of telecom operators, increased to Rs. 139 during the June quarter from Rs. 128 a year ago.
Moondra said the ARPU range has compressed from zero to Rs. 2,000 to Rs. 150 with GST, and everyone is able to meet their requirement with plans costing Rs. 500-600.
"Now, the requirement is pay as you use more should apply. At the upper end for higher usage, the ARPU needs to go up. This will happen for sure as we start rationalising the tariff," Moondra said.
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