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Vodafone Idea Considers Fundraising to Pay AGR Dues
After the Supreme Court has instructed all the telecom operators to pay 10 percent of the total adjusted gross revenue (AGR) related dues, the telecom major, Vodafone Idea's board is considering fundraising options. The Supreme Court has directed the telecoms to pay the dues in 2020-21 and the remaining is to be paid in installments over 10 years, beginning from FY 2022.
The telecom firm was expected to resume its fundraising discussion but had stalled due to the AGR case. Thus, the company may approach Amazon and Verizon Communication of the U.S.
The industry experts believe that the company would require fresh equity, higher tariff, and concession in various government levies to continue their operations. Alongside, the annual installment of AGR sues, which include license fee, spectrum usage charges, penalty, and its interest all these the company would owe 
58,254 crore to the government. Out of which, the company has already paid 7,854 crore to the telecom department
58,254 crore to the government. Out of which, the company has already paid 7,854 crore to the telecom department
The company states that its board would consider and evaluate all the proposals for fundraising in one or more tranches by way of a public issue, preferential allotment, private placement, that includes a qualified institutions placement or through any other permissible mode and combinations, continued with the issue of equity shares or through the way of any instruments.
The management has also stated that its fundraising plans would depend on the apex court's verdict and the board would decide on the quantum once the order is passed. Further, the telecom has also informed the stock exchanges that as part of the firm's corporate strategy. It is evaluating several opportunities for improvising stakeholders' value.
Analysts at Credit Suisse, states, “Vodafone Idea will need significant equity infusion along with meaningful operational improvement to meet its cash flow needs over the medium term. Our analysis shows that despite Arpu recovery to 170 (+49 percent from June 2020 levels) and being able to stem the loss of subscribers to 270 million by FY23E (vs 280 million as of June 20), cash balance for VIL would be in a precarious situation by FY22E end. Further, resumption of 15,700 crore of deferred spectrum payments from FY23E would accentuate the cash flow strain for VIL.”
170 (+49 percent from June 2020 levels) and being able to stem the loss of subscribers to 270 million by FY23E (vs 280 million as of June 20), cash balance for VIL would be in a precarious situation by FY22E end. Further, resumption of 15,700 crore of deferred spectrum payments from FY23E would accentuate the cash flow strain for VIL.”
The telecom company has already had plans of monetizing some of its non-core assets such as its stake in Indus Tower, Data centers, fiber assets. Other than these, the company has some hope on synergy benefits and tax funds. But these might not be sufficient enough to pay the AGR dues. Thus, the company has scheduled a board meeting on September 4, 2020, to consider fundraising.
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