Vodafone Idea Ltd. will prioritise payment of vendor dues, even as it plans to roll out 5G in the next six to seven months, according to Chief Executive Officer Akshaya Moondra.
In the first quarter of the next fiscal, the company plans to “strike a balance” between its allocation of funds to vendor overdue, along with necessary capital expenditure, Moondra said in an earnings conference call.
Indus Towers, one of Vodafone's vendors, has disclosed that the telecom company's dues to it stood at Rs 5,699.6 crore as on Dec. 31.
For the 5G roll-out, the company will need about six months after it receives funding, according to Moondra. The management of the company refused to speak on the funding front, saying that it is “in progress with investors.”
In the earnings call after the second quarter results, Moondra had said that the company will finalise funding plans by December 2023.
“The new funding will be used for new capex and the generation that we are getting from our operations minus the old-debt servicing will be used to pay the vendors,” he said.
Its competitors, Reliance Jio Infocomm Ltd. and Bharti Airtel Ltd., have already rolled out 5G but the technology is yet to be monitised, despite heavy capital expenditure already by the two telecom companies.
“By then the monetisation will be clearer than it is today, and our strategy will be based on that,” the CEO said.
Debt Position
On the debt front, nearly Rs 5,400 crore will be payable by the end of March 2025. Of this, Rs 533 crore is the principal payment for spectrum. While, Rs 3,200 crore is debt from banks and financial institutions.
Debt from banks and financial institutions reduced 54% to Rs 6,050 crore from the third quarter of the previous fiscal.
There is also Rs 1600 crore of optionally convertible debentures.
The total gross debt, excluding lease liabilities and including interest accrued, stood at Rs 2.14 lakh crore as of Dec. 31. It comprises deferred spectrum payment obligations of Rs 1.38 lakh crore and AGR liability of Rs 69,020 crore, that are due to the government.
However, the debt payable in FY26 will be Rs 30,000 crore, after the four-year moratorium on AGR dues is lifted. Of this, Rs 28,000 crore will be payable to the government and the balance will be due to banks and financial institutions.
Funding will be crucial for the company to meet these obligations and for roll-out of 5G.
The company announced earlier that a promoter group has promised to infuse Rs 2,000 crore, if required.
Vodafone Group Plc owns 18.1% stake in Vodafone Idea, while the Aditya Birla Group holds 32.3% stake.
This commitment will be part of the overall equity raise, Moondra said. “However, that support is available in case the company is needing it necessarily for meeting its impending obligations.”
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