Vodafone Idea, the indebted telecom company, announced on Tuesday that, following funding talks with investors, it will require six to seven months to launch 5G services. Akshaya Moondra, the CEO of Vodafone Idea, stated during the company’s earnings call that the telco is developing use cases and talking with different vendors about the roll-out of 5G.
“I believe there needs to be some movement in the industry towards monetisation, as we have made significant investments without any returns. We will have a better understanding of the state of monetisation if, assumed, 5G is launched within the next six to seven months. We will require some time to launch once funding is secured. About six to seven months, Moondra said.
He stated that only after funding is secured will the company be able to roll out 5G. He declined to respond to inquiries regarding the funding status, citing that it is currently in the discussion phase. “We are currently working with investors on funding.” We are unable to address any inquiries on this topic due to the nature of these conversations,” Moondra stated.
Moondra had indicated hope for close talks on funding in the December 2023 quarter during the September 2023 quarter earnings calls. Due to debts of about Rs 5,400 crore that are due for payment in the upcoming fiscal year, Moondra revealed that the company will need to tread carefully in the absence of funding.
“The primary component of the Rs 5,400 crore payment is the Rs 533 crore in spectrum payouts. Subsequently, there is over Rs 3,200 crore in bank debt and another Rs 1,600 crore in overdraft commercial debt (OCDs) whose repayment is contingent on the success or failure of conversion. This Rs 5,400 crore will be reduced by Rs 1,600 crore if they are turned into stocks, according to Moondra.
He said that in order to improve cash flows and pay vendors on time, the company will need to balance its capital expenditures for the upcoming fiscal year. In the December 2023 quarter, Vodafone Idea (VIL) reported a reduction in net loss to Rs 6,986 crore, aided by an exceptional one-time gain of Rs 755.5 crore. The struggling telco also saw an improvement in average revenue per subscriber.
In the same period last year, VIL’s net loss was Rs 7,990 crore.
The group owed a total of Rs 2,14,964 crore as of December 2023. Due to the financial agreements’ failure to comply with specific covenant requirements, as of December 2023, Rs 2,767.6 crore was reclassified from non-current borrowings to current maturities of long-term debt.
The cash-strapped telecom operator saw almost unchanged operating revenue of Rs 10,673.1 crore year over year. The company has been having trouble competing with bigger rivals in the fiercely competitive Indian telecom market, such as Reliance Jio and Bharti Airtel.
When the company has to pay off debt totaling approximately Rs 30,000 crore in FY’26—roughly Rs 2,800 crore in bank loans and roughly Rs 27,200 crore in government obligations—it will face a significant challenge.
“In FY’26, government payouts will be Rs 26,000-27,000 crore,” said Moondra. In addition, the company still owes over Rs 7,000 crore in GST.
According to Moondra, the industry has been requesting a refund of GST for a long time. If a cash refund is not possible, telecom operators should be able to use the refund to offset payments made on a reverse charge basis.
“We have asked if government payouts, such as spectrum and all, can be free from GST since they are one-time payments. Blocking GST is actually a little unfair to the industry. Moondra stated that any assistance from the government would be greatly appreciated.
