Good news for Vi
Last week, good news came for the telecom company Vi which was in trouble for a long time. When the government approved a relief package for it and the Adjusted Gross Revenue (AGR) dues of the telecom company were frozen and the repayment was extended for 16 years. This was a good news for the company which was facing problems for a long time. Meanwhile, there is also a positive news that banks led by State Bank of India will reconsider giving new funds to Vodafone Idea. If the company gets funds then its path forward may become easier.
Bankers said the decision has changed the company’s liability profile and clear information about its funding needs and future business plans is necessary to consider fresh funding. Banks were reluctant to give loans to Vi because it had huge liabilities, mostly statutory dues, such as deferred spectrum payments and AGR dues, lack of cash flow and doubts over its ability to repay new loans.
ET has quoted a banker in its report as saying that as per the plans shared earlier by the company, Vi needed Rs 35,000 crore. We have to find out how much they need now and how much is possible based on the cash flow of the company. This is a huge amount and it will come from a consortium of lenders, for which the banks will have to decide together.
repayment in installments
The Department of Telecommunications (DoT) froze Vi’s AGR dues of Rs 87,695 crore for the period 2006-07 to 2018-19 and allowed repayment in installments over 16 years till 2041. Under the revised schedule, Vi will pay Rs 124 crore annually for six years between March 2026 and 2031, followed by Rs 100 crore annually for four years from March 2032-35.
The remaining amount will be paid in equal annual installments over six years from March 2036-41, when a committee appointed by DoT will reassess the final liability, the filing said. This means that about 95% of Vi’s AGR liability of Rs 87,695 crore will remain frozen for the next decade. Another bank executive said this is an important development as it deals with a huge overhang. Vi needs funds. But the bank would also like to know from the company about its needs and future plans.
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