Vodafone Idea hints 5G roll-out in 6-7 months after getting funds

Debt-ridden telecom firm Vodafone Idea on Tuesday said it will need 6-7 months to roll out 5G services after securing funding, for which discussions with investors are underway.

Vodafone Idea CEO Akshaya Moondra during the company's earnings call said that the telco is in discussion with various vendors for the 5G roll-out as well as developing use cases.

"Having made large investments and no monetisation happening, I think the industry does need to see some movement towards monetisation. Let's say if we are launching 5G probably in the next 6-7 months time then we will have a better idea what is happening on the monetisation front. After funding is there, we will need some time to roll out. Let's say 6-7 months," Moondra said.

He said the company will be able to roll out 5G only after funding is in place. However, he refused to reply to any question on the status of funding as it is in the discussion stage.

"As for funding, it is in progress with investors. Given the nature of these discussions, we will not be able to respond to any queries on this subject," Moondra said.

During the earnings calls for September 2023 quarter, Moondra had expressed optimism to close discussions on funding in December 2023 quarter.

In absence of funding, Moondra shared that the company will need to walk on a tightrope as debts of around Rs 5,400 crore are coming up for service in the next financial year.

"The Rs 5,400 crore payment includes Rs 533 crore of spectrum payouts, the principal part. Then there is about Rs 3,200 crore-plus of bank debt and then there is Rs 1,600 crore of OCDs where repayment is dependent on whether conversion happens or not. If they are converted into equities, that Rs 1,600 crore will go out of this Rs 5,400 crore," Moondra said.

He said the company will have to strike a balance between allocation for capex that it needs to improve cash flows as well as pay some amount to vendors in the next financial year.

Vodafone Idea (VIL) has reported narrowing of net loss to Rs 6,986 crore in the December 2023 quarter, helped by Rs 755.5 crore one-time exceptional gain, while the average revenue per subscriber improved for the ailing telco.

VIL's net loss stood at Rs 7,990 crore in the year-ago period.

As of December 2023, the total debt of the group stands at Rs 2,14,964 crore. As of December 2023, an amount of Rs 2,767.6 crore has been reclassified from non-current borrowings to current maturities of long-term debt for not meeting certain covenant clauses under the financial agreements.

For the cash-strapped telco -- which has been struggling to keep up with the larger rivals like Reliance Jio and Bharti Airtel in the hugely competitive Indian telecom market -- the revenue from operations remained nearly flat at Rs 10,673.1 crore year-on-year.

The company will have a major challenge in FY'26 when it needs to service debt of around Rs 30,000 crore comprising about Rs 2,800 crore bank loans and around Rs 27,200 crore government dues.

"In FY'26, government payouts will be Rs 26,000-27,000 crore," Moondra said.

Besides, the company has over Rs 7,000 crore GST outstanding.

Moondra said there has been a long pending request from the industry for the refund of GST and in case the cash refund is not possible, telecom operators should be allowed to offset it against payments which are made on reverse charge basis.

"We have requested items such as spectrum and all, which are one time payouts, if government pay out can be exempted from GST. GST blockage is really a bit unfair for the industry. Any support from the government will be very helpful," Moondra said.