Mobility paves Samsung’s silver path
The Korean giant’s early bet on mobile phones helped it hit the $10-bn mark in India, but in its 25th year it ...
Under the cosh - Kamal Narang
The future of Vodafone Idea is still uncertain with the Supreme Court putting off a decision on allowing more time to pay the AGR dues. But even if the apex court agrees to allow 20 years to make the payments, Vodafone Idea may find it difficult to compete with the cash-rich Reliance Jio.
There are multiple headwinds facing the operator. Vodafone Idea is still playing catch-up with Reliance Jio and Bharti Airtel when it comes to 4G network roll-out. Even if the ₹53,000-crore AGR dues have to be paid over 20 years, the operator’s balance sheet will be highly leveraged to make fresh investments into network roll-out or acquiring fresh spectrum.
It is expected that the Centre will hold 5G spectrum auction sometime next year and going by the existing reserve price for the airwaves, Vodafone Idea may find it difficult to participate in a bidding process in view of the already large debt on its books.
In this scenario, there are limited options for the operator. One option could be to increase tariff further so that it gets an average revenue per user of around ₹260 per month. That’s 1.5 times what it gets at present. That looks unlikely given that rival Reliance Jio has managed to improve its overall debt position and is under no pressure to increase tariffs.
“While we think Vodafone Idea can manage its cash flow needs till FY22 mainly on account of a two-year moratorium (FY21 and FY22) on deferred spectrum debt, we believe the company may find it challenging to service the AGR dues in case the tenure for staggered payment is short (less than 10 years).
“Beyond FY22 (when its annual spectrum debt repayment of ₹15,700 crore resumes), we believe the company’s viability will remain under a cloud without strong operational improvement and significant equity infusion. Even at ₹200 ARPU. the company would find it difficult to meet its operating and regulatory cash flow needs from FY23 onwards,” said an analyst at Credit Suisse.
Vodafone Idea on Thursday told the Supreme Court that it does not have money to even offer additional guarantees to secure a longer term duration for the AGR payout.
The only viable option for the operator then could be to sell equity stake to a financially strong investor once the court allows more time to pay the dues.
Both Vodafone Plc and Aditya Birla Group have stated that they will not infuse any more funds into the telecom company. Without fresh funding the telecom operator is as good as dead even if it gets relief from the Supreme Court in July.
The Korean giant’s early bet on mobile phones helped it hit the $10-bn mark in India, but in its 25th year it ...
Antrix should adopt a different tactic than merely fighting over jurisdiction: Experts
Invest in relationships, enterprise, behaviour, effort and learning
From different types of osmoses to new membranes, researchers have come up with ways of drawing water
Only half the Sensex stocks have bettered the index’s return in the last 10,000-point journey
High valuation and stiff competition from larger players are a dampener
Investors with a short-term perspective can buy The New India Assurance Company (NIACL) stock at current ...
₹1490 • HDFC Bank S1S2R1R2COMMENT 1475146015051520 Fresh short positions are recommended with a stiff ...
What makes the new crop of young Indian cricketers such game-changing winners? Over and above their talent, ...
Regina King’s film ‘One Night in Miami’ turns the spotlight on four young men’s often conflicting ideas of ...
Each new year millions of people around the world resolve to change their lives for the better. These ...
In these isolated times when people yearn for a slice of the familiar, amateur and professional chefs are ...
Digital is becoming dominant media, but are companies and their ad agencies transforming fast enough to make a ...
Slow Network, promoted by journalist-lyricist Neelesh Misra, pushes rural products and experiences
How marketers can use the traditional exchange of festive wishes meaningfully
For Fortune, a brand celebrating its 20th anniversary, it was a rude shock to become the butt of social media ...
Three years after its inception, compliance with GST procedures remains a headache for exporters, job workers ...
Corporate social responsibility (CSR) initiatives of companies are altering the prospects for wooden toys of ...
Aequs Aerospace to create space for large-scale manufacture of toys at Koppal
And it has every reason to smile. Covid-19 has triggered a consumer shift towards branded products as ...
Please Email the Editor