NEW DELHI: Having received some much-needed clarity on its AGR payment schedule from the Supreme Court, Vodafone Idea’s board has decided to meet this Friday to examine methods to raise critically needed funds. The SC had on Tuesday allowed liable telcos to pay their massive dues in annual instalments over a period of ten years.
According to the government, the companies are to pay 10 per cent of their remaining dues within the end of this fiscal year on March 31, 2021. Motilal Oswal analysts note that Airtel would have to pay Rs 4,500 crore by the end of this year and Rs 3,400 crore every year following that. VIL, meanwhile, would have to pay Rs 5,800 crore this year and Rs 6,600 crore subsequently.
“VIL, with... EBITDA of Rs 6,800 crore in FY21 and net debt of Rs 1.5 lakh crore (including the AGR liability), is in a precarious situation. However, with payments from Vodafone PLC, Bharti Infratel, and existing operating cash flow, it could manage the current fiscal. But, it would require a sizeable price hike and capital infusion,” says a MOFSL research note.
VIL’s board will meet to plan out how the company is going to manage the heavy cash outflow. In a stock exchange filing, VIL said that it will “consider and evaluate any and all proposals for raising of funds in one or more tranches... on September 4”.
The company may also have to embark on several rounds of price hikes, with a 22 per cent increase needed to plug the gap for this year. “FY23 onwards, its cash requirement should increase to Rs 32,700 crore, including an Rs 16,500 crore deferred-spectrum liability. (It) may require a huge round of price hike, along with a capital raise,” MOFSL said.