Vi makes emergency call to DoT for equity conversions, seeks nod for rejigs to get relief on spectrum, AGR dues

Vodafone Idea (Vi) chief executive Akshaya Moondra has appealed to Department of Telecommunications (DoT) secretary Neeraj Mittal to urgently allow equity conversion of the telco’s upcoming adjusted gross revenue (AGR) and purchase dues relating to the 2012, 2014, 2015 and 2016 spectrum auctions as the cash-strapped company braces for a spike in regulatory payouts. If DoT backs Moondra’s call, the government holding in Vi could jump to 49%, from 22.6% at present.

The telecom JV between UK’s Vodafone Plc and India’s Aditya Birla Group has also told DoT that its current financial position does not allow it to furnish a Rs 6,091 crore bank guarantee (BG) or make a cash payment of Rs 5,493 crore towards a shortfall in the 2015 spectrum auction.

Under these circumstances, it has asked the DoT not to take “any coercive action” against the company.


Moondra’s SOS comes as the telecom department’s proposal to waive the AGR dues of telcos was put on hold amid a lack of consensus within the government’s top echelons, a move that dealt the largest blow to Vi.

“We urgently require cash flow support from DoT for AGR and spectrum instalments falling due... AGR dues and spectrum instalments for 2012, 2014, 2015 and 2016 auctions may be permitted for equity conversion at the earliest as envisaged under the Telecom Reform Package 2021,” Moondra said in a March 11 letter to the DoT secretary. ET has seen a copy of the letter. According to Vi’s letter, total equity conversions would amount to Rs 36,950 crore “on an NPV (net present value) protected basis.”

Jump in Payments

This could potentially increase the government holding in Vi to 49%. It would include a proposed equity conversion of the Rs 13,809-crore spectrum payment instalment relating to the 2015 auction.

“We request your support for equity conversions up to the threshold of government of India shareholdings at 49%, that is, an amount of Rs 36,950 crore on NPV protected basis, subject to customary approvals at our end,” Moondra said.

However, at Vi’s current market capitalisation of around Rs 54,401 crore, a 49% stake would be worth Rs 26,656.5 crore. The telco did not immediately respond to queries.

Financial challenges

In the backdrop of its immediate financial challenges, Vi has called on the DoT to urgently consider the equity conversion of its Rs 13,809-crore spectrum payment instalment relating to the 2015 auction, as the moratorium period on such payments ends April 10.

The government earlier converted Vi’s interest dues worth Rs 16,000 crore into a 33% stake. After a recent equity fundraise of Rs 26,000 crore and capital infusion by UK’s Vodafone, that now stands at 22.6%. Vodafone Plc holds 24.39%, while Aditya Birla Group holds a shade over 14% in the telco.

With no relief on the AGR dues front, Vi faces a jump in regulatory payments after the moratorium on those payouts ends in September.

JM Financial estimates Vi has to pay Rs 29,100 crore in March 2026. Subsequently, its annual regulatory payouts will rise further from FY27 — estimated at Rs 43,000 crore till FY31. Vi’s AGR dues in the quarter ended December stood at Rs 70,000 crore, while its cash position was at a modest Rs 12,090 crore.

ET had recently reported that DoT would work on a revised relief plan for the debt-laden telecom sector, especially given Vi’s precarious financial situation.