The USD 200 million fund infusion by British telecom giant Vodafone offers near-term liquidity support to Vodafone Idea, but longer-term viability remains under cloud, Credit Suisse has said.
Vodafone has advanced infusion of USD 200 million (about Rs 1,530 crore) in its Indian joint venture with Aditya Birla Group, that is facing a humongous liability of past statutory dues.
The accelerated payment to Vodafone Idea (VIL), which was otherwise due in September 2020, was made under terms of 'contingent liability mechanism'.
The amount, however, is relatively small when seen in the context of over Rs 58,000 crore liability that the cash-strapped Vodafone-Idea Ltd faces just on account of past statutory dues as a fallout of a Supreme Court decision, say experts.
"Longer term viability of VIL continues to remain under cloud," Credit Suisse said in a note adding that it believes that the "sector is likely to be heading towards a two (private) player market".
According to Credit Suisse while VIL may be able to sustain over next two years with the spectrum and AGR payment deferment, "VIL's business viability is under cloud even at Rs 200 Average Revenue Per User (and subscriber base of 280 million) once the deferred spectrum payment resumes in FY23...
"The company will need strong operational improvement along with meaningful equity infusion (on which there is limited clarity) to sustain in the long term," the note added.
Vodafone Group on Wednesday said it has "accelerated this payment to provide Vodafone Idea with liquidity to manage its operations, and to support the approximately 300 million Indian citizens who are Vodafone Idea customers as well as the thousands of Vodafone Idea employees during this phase of emergency health measures, taken as a result of the COVID-19 pandemic."
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