Vodafone Idea diverts funds from rights issue to pay off AGR dues

Vodafone Idea must make payment of around $750m to India’s Department of Telecoms by the 23rd January
India, Vodafone Idea, Finance, Telecoms

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India’s second biggest telco, Vodafone Idea, has reallocated funds from its recent rights issue to pay down dues owed to the Department of Telecoms, regarding its adjusted gross revenue charge.

A report in the Economic Times of India suggests that Vodafone Idea’s board of directors have reallocated $400 million (INR28.26 billion) to go towards paying down the AGR dues. Vodafone Idea is required to pay India’s Department of Telecoms around $750 million (INR53 billion) by the 23rd of January 2020.  

“The Board of Directors of the Company has, by a resolution dated 10 January 2020, approved the modification to the objects of the Rights Issue,” Vodafone Idea said in a regulatory statement on Sunday.

The change in the allocation of funds coincides with a government decision to grant a two year moratorium on spectrum payments, in an attempt to give some relief to India’s cash strapped mobile network operators. Vodafone Idea’s board has elected to plough the money it saved on spectrum payments directly into paying off its hefty AGR dues.

Late last year, senior executives at Vodafone Idea and at Vodafone Group warned that the joint venture could go out of business, unless the government provided an adequate relief package.

Speaking at an industry event in London late last year, Vodafone Group CEO, Nick Read, said that the time had come for India’s government to decide whether it was serious about safe guarding its telecoms sector.

"I'm very clear about what the requirements are for us to be a sustainable business going forward. So, when I use the word critical, I mean critical!"

"To be very clear: if you don't get the remedies that you are looking for and the situation is critical in terms of existing as a going concern. We are not going to put more equity into it from the Group. Our view is: India it’s time for you to decide whether you really do want a vibrant and competitive market place," he said. 

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