May convert dues to Equity: Vodafone Idea

New Delhi: Debt-ridden telecom operator Vodafone Idea is evaluating the option of converting interest dues  arising out of the deferment of  statutory payments into equity,  a senior company official said on  Monday.

The company is also in talks  with banks and investors for raising funds and part of the proceeds  is likely to be utilised towards  meeting obligations related to  debt maturing this fiscal, Vodafone Idea Limited (VIL) Chief Financial Officer Akshay Moondra  said during the company’s earning call.

In a regulatory filing it had  said, “The company keeps discussing with various banks its  funding and other requirements  in the ordinary course of its business, including with State Bank  of India who are one of our main  bankers. As of now there is no development, which would require  disclosure under the SEBI Listing  Regulations.”

The government has given the  option to defer all their dues payment for spectrum and Adjusted  Gross Revenue (AGR) by four  years to provide debt-ridden telecom companies an opportunity  to improve their cash flows and  invest in business.

“For the AGR dues, we are in  discussion with the DoT (Department of Telecom) to determine  the final amount in line with the  Supreme Court judgement. Further, there is an option to convert  such deferment into equity. We  are evaluating this and we will be  reverting on our decision on upfront conversion of interest into  equity by the deadline of January  12, 2022,” Moondra said.

According to him, the company  is also in discussions with banks  and investors for raising both  debt and equity. “These discussions also include some kind of  arrangement of funding to be able  to meet immediate maturities of  debt which are coming up in the  remaining quarter of FY’22.”

Last week, VIL reported a narrowing of consolidated loss to Rs  7,144.6 crore for the September  quarter on account of an increase  in mobile services tariff and cost  optimisation. The company had  posted a loss of Rs 7,218.2 crore in  the corresponding period of the  previous financial year.

In the latest September quarter,  its consolidated revenue declined  about 13 per cent to Rs 9,406.4  crore. The same was at Rs 10,791.2  crore in the year-ago period.

VIL’s total gross debt, excluding lease liabilities and including interest accrued but not due,  as of September 30, 2021 stood  at Rs 1,94,780 crore. The amount  comprises deferred spectrum payment obligations of Rs 1,08,610  crore, AGR liability of Rs 63,400  crore that are due to the government and debt from banks and  financial institutions of Rs 22,770  crore.

It may be recalled that the government had announced a slew of  policy relief measures in September, which helped Vodafone Idea  survive a potential bankruptcy. Mobile phone companies have  been allowed more time to pay  their dues.

Vodafone Idea had decided to  avail the four-year moratorium on  spectrum dues. This will allow the  stressed telecom operator to make  investments in new services and  technology.