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Vodafone Idea will commence vendor payments from Q3 of FY24, according to the management commentary. At the investor call for Q1 of FY24 on Wednesday, interim CFO, Murthy GVAS, averred that the amount of payment liabilities will ease after Q2, when cash flows of the telco will be enough to pay debts and payments maturing in the “upcoming three quarters”. Thus, the company will finally have the ambit to start clearing vendor payments, owed to the likes of Indus Towers and Nokia that lease telecom towers and supply network gear to the telco.
The cash-strapped telco, quite justifiably so, did not commit to clearing vendor payments. As of now, the telecom operator is taking a piecemeal approach to clearing liabilities to clearing liabilities as they come about. In that endeavour, one of Vodafone Idea’s promoters has agreed to provide direct or indirect financial support of ₹2,000 crore, to clear payment liabilities for Q2 FY24. “It is a touch and go situation,” one analyst told businessline.
Penalty
The telco will also be incurring a penalty for missing the deadline to meet minimum service obligations on the 5G spectrum that it purchased in 2022. Vodafone and Adani had asked the Department of Telecommunications for a grace period on the August 16 deadline to meet the service obligations. Since the regulator has denied this request, they will have to pay a penalty which is lesser than ₹20 crore.
Since the telecom operator has been unable to raise funds, vendors have been pressuring the company since January to make payments. Indus towers tried to ask the telco to make advanced payments since the start of the year.
Total debt
The total gross debt (excluding lease liabilities and including interest accrued but not due) as of June 30, 2023, stood at ₹2,117.6 billion, comprising of deferred spectrum payment obligations of ₹1,337.4 billion and AGR liability of ₹668.6 billion that are due to the government, debt from banks and financial institutions of ₹95 billion and Optionally Convertible Debentures amounting to ₹16.6 billion. With cash and cash equivalents of ₹2.5 billion, the net debt stood at ₹2,115.1 billion. The debt from banks and financial institution has reduced by ₹57 billion during the last one year (₹152 billion in Q1 FY23).
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