New Delhi, NFPost: As the company is going through troubled waters, the cash-strapped telco Vodafone Idea got a reprieve as the government approved investment up to Rs 15,000 crore through foreign direct investment (FDI).
According to officials familiar with the development, a top-level group comprising representatives from the ministries of home affairs, external affairs, finance and commerce, and industry approved the decision for financial infusion.
The nod, which is an enabling provision, would help the financially stressed company raise funds to pay up some of its dues linked to adjusted gross revenue (AGR), reduce debts, and use the money for operational expenses.
This comes at a time when the company has approached the government seeking relief in payment of certain dues. An official in the Department of Telecom (DoT) said it’s a move indicating that the government does not want Vodafone Idea to go under.
The company did not respond to queries. But, last September, it had said in a regulatory filing that the board of directors of the company had approved raising of Rs 15,000 crore each through the issue of equity shares of various forms and debt, with the total aggregate amount not exceeding Rs 25,000 crore.
Stuck with debt amounting to Rs 1.8 trillion (including deferred spectrum payment obligations of Rs 96,270 crore, AGR liability of Rs 60,960 crore, and loans of Rs 23,080 crore) as on March 31, 2021, Vodafone Idea had recently asked the government for a one-year moratorium to clear spectrum installment of over Rs 8,200 crore payable in April 2022.
During a hearing in the Supreme Court, it cited the steep AGR payout and accumulating dues for its inability to make the payment. It had also mentioned challenges it was facing in raising funds as investors were wary about the low consumer tariffs and resulting in poor health of telcos. The company was arguing its case in court that the AGR dues calculated by the DoT were much higher than what they should have been.