Vodafone Idea pays Rs. 1,700 crore to the Government as part of clearing its dues

Vodafone Idea's current debt stands at a reported Rs. 2.2 lakh crore

Vodafone Idea, one of India’s major telecom operators, made a significant payment of Rs. 1,700 crore to the government for its spectrum acquisition in 2022. However, it’s essential to contextualize this payment within the backdrop of the company’s challenging financial situation.

Vodafone Idea has been grappling with a colossal debt burden, which was originally slated for repayment last month. Consequently, the recent payment not only covers the spectrum acquisition cost but also includes a nominal interest component, reflecting the delay in settling the dues. A report stated that the Supreme Court in 2020 gave the telecom company 10 years (up to 2031) to clear all of its dues.

“Vodafone Idea has many requirements. It has a particular requirement of capital. How much capital and who will infuse? All those things are under discussion at this point of time. The responsibility of capital has to come from various sources. The company just doesn’t require conversion. It requires capital. All those things are a complex issue,” said Ashwini Vaishnaw.

According to official reports, the company not only cleared its pending dues of approximately Rs. 450 crore for the March quarter of 2022-23 but also made a substantial payment of around Rs. 1,700 crores to the Department of Telecommunications, Government of India, as part of its 2022 Spectrum Auction Instalment.

“We have received an official cheque of Rs. 1,700 crore by Vodafone Idea for spectrum and interest liabilities”, said an official report. It is to be noted that the government holds approximately 33% stake in Vodafone Idea. However, Vodafone Idea faces a substantial challenge in the form of its total debt, which currently stands at a reported Rs. 2.2 lakh crore.

Despite the company’s efforts to raise capital and alleviate its debt burden, it has encountered difficulties due to adverse market conditions and existing debt obligations.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of ET Edge Insights, its management, or its members

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