Will Monetizing Data Centre Relax Vodafone Idea from Debt?


Vodafone Idea has announced that it is exploring to monetize data centers to reduce the company's debt. Along with the data centers, Vodafone Idea is also planning to bank on its 11.15 percent stake in Indus Towers after the completion of the Indus Towers-Bharti Infratel merger. Further, the company is also looking for other options to monetize nearly 1.6 lakh kilometers of intra-city and inter-city fiber as well as data centers. 

"Separately, we are also exploring the opportunity to monetize our data centers. We believe this will provide us financial flexibility," says Ravinder Takkar, MD & CEO, Vodafone Idea.

The gross debt of Vodafone Idea as of September 30, 2019, was 1, 17,300 crore including the deferred spectrum payment obligations of 89, 170 crore to the government. On Thursday, the company reported a consolidated loss for 50,921 crore. This was the highest loss posted by any Indian corporate for the September quarter on account of liability arising out of the Supreme Court's order in the adjusted gross revenue (AGR) case.

The company has predicted the accountability of 44,150 crore after the apex court order, and made provisioning of 25, 680 crores in the second quarter of this fiscal. Vodafone Idea has also set aside 4,822 crore for certain assets that it may not be able to use, as it is shifting its network from 3G to 4G technology.

The Supreme Court's order has favored the government and instructed the telcos to pay their dues as demanded by the Department of Telecom. Thus, Vodafone Idea states that the ability to continue its business further would depend on the relief sought from the government and the positive outcome of the legal option it has. The company is seeking assistance from the government through the Cellular Operators Association of India (COAI). Thus, Vodafone Idea have requested the government not to urge for the AGR liability payment and waive off the spectrum usage charges (SUC) on non-licensed revenue, and also to reduce the license fee and SUC rates and the use of GST credit for government levies payment.

Furthermore, the industry body has requested the government to permit the payment through installments and grant a moratorium of two years for the payment of spectrum dues.