What next for Vodacom Idea after AGR decision?

What next for Vodacom Idea after AGR decision?

There’s been further fallout from the Indian Supreme Court decision to allow ten years for adjusted gross revenue (AGR) dues repayment, with reports that the Vodafone Idea board plans to meet on 4 September.

According to the Indian press, the board of the cash-strapped operator – now forced to budget for repayment of just under $7 billion worth of outstanding AGR dues (of which it has so far paid the equivalent of just over $1 billion) – will meet to discuss strategies to pay these massive debts. It will also need to look at ways to continue investing in its networks to be able to compete with its rivals.

Potential ways forward to raise funds could include a public issue, a preferential allotment, a private placement and the sale of assets among other approaches.

India’s Economic Times has suggested that the company needs to raise at least $3-4 billion to be able to compete effectively in the market. And of course, the AGR payments come on top of this.

Obviously, now that Vodafone Idea knows where it stands it has something to base its calculations on, but that doesn’t necessarily make its job any easier as it already has significant outgoings and a falling end user base.

Things are better for Bharti Airtel, which has paid off about half of its AGR dues of about $3.54 billion already, although the company now has to wait for input from the Department of Telecommunications, which has been asked by the Supreme Court to check if Jio and rival Airtel have pending AGR dues (on top of their existing dues) from their spectrum trading deals.

The court’s order focuses on trading deals that Bharti Airtel had struck with the now bankrupt telecommunications companies Videocon and Aircel as well as Reliance Jio's deals with Reliance Communications (RCom), which is going through insolvency proceedings at the moment. RCom, Videocon and Aircel still owe significant sums in AGR dues.

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