Vodafone Idea (Vi) has not heard from the department of telecom (DoT) since April on the Centre’s pending conversion of dues worth Rs 16,130 crore into equity, Vi chief executive officer (CEO) Akhaya Moondra has said.
“Basically, we are in discussions with the government, and I also don’t know the reason why this (dues conversion) is not happening. The government is taking some time,” he said on Friday, during an analyst call to discuss the company’s Q2 (July-September) results.
“On our end, we exercised the option to convert back in January. We had discussions with the DoT in March. We had confirmed the amount of conversions in April. After that, we have had no communication from DoT on this matter,” Moondra stressed.
The board of Vi had, in January, approved the conversion of Rs 16,130 crore worth of interest on adjusted gross revenue (AGR) dues into equity for the government.
This will give the government around 33 per cent stake in Vi.
In September, the finance ministry cleared the proposal, and now, DoT has to finalise the transaction.
Moondra said the government’s slow movement on the issue has led to a slowdown in funding talks. This was largely dependent on two things. First, the return of the bank guarantee by DoT, which happened in early April. The second-most important event, which needs to happen, is the government conversion into equity,” Moondra added.
Vi’s net loss widened 6.4 per cent year-on-year (YoY) to Rs 7,595 crore in the second quarter of FY23. This is due to an increase in finance and operating expenses.
During the same period last year, the company had posted a net loss of Rs 7,132 crore. Net loss widened by 4 per cent on a sequential basis. During the first quarter of FY23, Vi had seen a net loss of Rs 7,296 crore.
Need funding quickly
The CEO said the company remains engaged with banks for funding, adding that lack of funding is currently not hampering operations or growth prospects much. However, it is restricting the company from expanding its 4G footprint.
“We are trying to close the funding quickly, so that some of the backlog of vendor payments can be addressed,” Moondra said.
He added the company is lagging behind the other two telcos in rolling out 5G. This would not pose a major challenge if it concludes funding in the next few months.
“Going forward, in terms of cash allocation, the priorities would be operational payments, followed by vendor payments and capex.
In terms of capex, we have always said that till the time the funding is in place, any significant increase in capex is not possible,” he said.
Between March 2022 and July 2022, the company has raised Rs 4,940 crore from its promoters. This clearly reflects the promoters’ commitment to Vi and their belief in the long-term prospects of the company, Moondra said.
ATC India, one of the largest infrastructure service providers for the company, has agreed to subscribe to the optionally convertible debentures amounting to Rs 1,600 crore, he added.
Moondra said the company has reached as many as 8,500 4G sites. It has also converted as many as 19,000 3G sites into 4G, shutting down as much as 50 per cent of 3G sites and exiting some circles completely.
The 4G subscribers of the company now stand at 120.6 million, up by 1.6 million.
The CEO said postpaid changes made earlier this week do not have any price intervention, but would ultimately have an impact on average revenue per user (ARPU).