Vi's chance to dial stability

Debt-laden Vodafone Idea has been given a chance to turn itself around. This is also crucial for the government, which wants to avoid a duopoly in the telecom sector

- SURAJEET DAS GUPTA

Vodafone Idea Ltd (Vi) informed the exchanges on January 9 that the government had granted it a 10-year moratorium on its adjusted gross revenue (AGR), dues which would be frozen as of December 2025 at %87,700 crore.

A committee of the department of telecommunications (DoT) would in the meantime reassess the dues and its decision on this would be final. The dues are to be paid in six equal instalments between March 2036 and March 2041. In the interim, Vi has to pay a total of ₹100-120 crore in the next 10 years up to March 2035.

The move clearly provides relief to Vi: Analysts estimate that based on net present value it will fork out 65 per cent less on AGR, freeing up capital and enabling it to raise fresh funds for its network expansion (its aim was to hit ₹45,000 crore).

Vi shares went up on Friday initially by 8 per cent but closed the day in the red by 1.74 per cent, ending at ₹11.30 a share. Many say the relief has fallen short of expectations — they expected DoT to reassess and reduce the AGR dues by at least 50 per cent upfront — and that this would create uncertainty among banks and potential investors to put money into the telco. And there is also the risk of the moratorium being challenged by competing telcos.

Welcome relief

Vodafone is far behind its rivals in 5G and could just lose the game, analysts said, pointing to its consistent loss of subscribers and the lowest average revenue per user (Arpu) among private telecom companies.