Government can give AGR relief if it wants to: Vodafone Idea CEO

Time of India

2 days ago

Mumbai: Vodafone Idea's (Vi) chief executive Akshaya Moondra said observations by the top court has paved the way for the government to offer adjusted gross revenue (AGR) relief to telcos if it wants to.Moondra added that bank funding remains its priority and is crucial to the telco increasing its 4G coverage to 90% of the population from around 84% that is being done with its existing financial resources. The telco has earmarked roughly ₹6000 crore capex for the ongoing quarter, a small part of which could spill over into FY2Q. The carrier had spent ₹4,280 crore caped in Q4FY25, its highest quarterly capex since the merger in August, 2018, to expand 4G and roll out 5G to stem subscriber losses to rivals Reliance Jio and Bharti Airtel.
The Vodafone Idea stock was down 0.9% at ₹6.98 in morning trade on the BSE Tuesday.
'Our view is that the government can do that (offer AGR relief)…Even when the reforms package was announced in 2021, there was some PIL filed in the Supreme Court, and that time also the court had stated to the effect that this is a policy matter, which is within the purview of the government, and they would not interfere in it,' Moondra said at the company's earnings call on Monday.
'If you look at the reforms package of 2021, the government had taken the initiative and I see no reason why the government should be constrained in any way to offer relief, if it decides to do,' he added.
He was referring to the Supreme Court's May 19 judgment quashing telcos' review petition in the AGR matter. However, the bench had then clarified: 'if the government wants to help you (the petitioners), we are not coming in your way."
'Definitely post the (Supreme Court) judgment, we continue our engagement with the government to find a solution to the AGR matter,' Moondra said. The telco's AGR dues stood at ₹76,000 crore on March 31.
Moondra further said that after the recent SC ruling, Vi has been aggressively pursuing talks with lenders for ₹20,000-22,000 crore bank funding, a priority for the telco.
'There are some activities which we must finish, which are currently in progress. So, we will get to a point of discussion with the banks somewhere this month once some of the prerequisites in terms of those actions and activities are completed,' the top executive said.
He said banks needed more clarity on the AGR issue, but the recent conversion of spectrum dues into government equity has been a big step forward. '…banks would (still) want some clarity on the AGR dues, but…it is not preventing the discussions from going forward.'
The company is also in talks with UK's Vodafone group to release a pre-agreed settlement amount, Moondra said.
Vi, in its earnings statement, said that as of March 31, assets including around ₹6400 crore, are recoverable from co-parent Vodafone Group Plc. on payment of a part of the telco's AGR dues by June 30. That deadline has now been extended to Sept. 30. 'The company believes it will be able to realise this asset,' Vi said in its earnings statement.
Cumulatively, during the year, the company has raised equity of ₹61,400 crore, including a follow-on public offer, preferential issuance to promoters and vendors, and an allotment of equity share to the government.
Last week Vi's board also approved raising up to ₹20,000 crore more even as its net loss for the March quarter widened sequentially to ₹7,166 crore from ₹6,609 crore and it continued to lose subscribers.
'We have also taken an enabling approval…So our primary source of fundraising remains bank borrowing. And I think the conversion of the government dues to equity and along with the upgrade in the credit rating, those are facilitating factors for us to take those discussions forward,' Moondra said.
Vi commenced 5G services in Mumbai, Delhi, Chandigarh and Patna last quarter and plans to cover all 17 circles where it has 5G spectrum by August 2025 as it contends with intense competition from rivals Reliance Jio and Bharti Airtel.
In Q4FY25, Vi added 6,900 new telecom towers, also the largest quarterly addition since merger. Vi's 4G population coverage reached 83%, up from 77% a year ago.
Vi ended the March quarter with 198.2 million users, falling from 199.2 million in the December quarter. Its 4G subscribers base grew a tad to 126.4 million as of March-end from 126 million as of December-end.
Moondra acknowledged the pressure on subscriber retention, saying, 'We are actively focused on improving our 4G experience and network coverage to bring back churned users and grow our base.'
He reiterated the need for tariff hikes and a review of the tariff structure, which should entail higher prices for subscribers having higher levels of consumption.