Info-tech

Vodafone Group’s exposure to Voda Idea capped at ₹8,400 crore

Our Bureau Mumbai | Updated on May 12, 2020 Published on May 12, 2020

UK-based Vodafone Group said on Tuesday its potential exposure to Indian telecom joint venture Vodafone Idea Ltd (VIL) is capped at ₹8,400 crore (€1 billion).

“The group’s potential exposure under this mechanism (terms of the merger deal with Idea) is capped at €1 billion and any cash payments or cash receipts relating to these contingent liabilities and potential refunds must have been made or received by Vodafone Idea before any amount becomes due from or owed to the group,” Vodafone said.

The group has a potential exposure to certain contingent liabilities and potential refunds relating to VIL and Idea Cellular at the time of the merger, including those relating to the Supreme Court’s adjusted gross revenue (AGR) judgment. Under this agreement, Vodafone Group and Vodafone Idea will reimburse each other on set dates following any crystallisation of these pre-merger liabilities and assets, it said.

AGR liabilities

VIL’s AGR liabilities stand at ₹53,038 crore. The group had entered into an agreement to merge VIL and Idea Cellular in July 2018.

The group has assessed a cash outflow of €235 million under the agreement to be probable at this time.

On April 22, the group announced that it had made an advance payment of $200 million to Vodafone Idea for amounts that are likely to be due in September 2020.

Indus Towers deal

The group has extended the long stop date on its agreement to merge Indus Towers (a three-way joint venture between Bharti Infratel, Vodafone Idea and Vodafone Group) and Bharti Infratel to June 24, it said.

In April 2018, Bharti Airtel, Idea Cellular (along with its subsidiary ABTL and Idea Group) and Vodafone Group entered into an agreement to merge Vodafone’s, Idea Group’s and Providence Equity Partners’ stakes in Indus Towers into Bharti Infratel, creating a combined company that will own 100 per cent of Indus Towers.

For FY20, the Vodafone Group has posted an annual loss of €455 million, compared to losses of €7.64 billion a year ago. Its share of losses related to VIL (€2.5 billion) is principally due to adverse Supreme Court rulings in India, and the group carrying value of VIL has been reduced to nil, it added.

Published on May 12, 2020
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