Good news for Vodafone Idea as India's 5G auctions get closer

Good news for Vodafone Idea as India's 5G auctions get closer

As the late July date for India’s 5G auctions approaches, operators will have to think carefully about where the money is coming from for the additional spectrum. However, it looks like Vodafone Idea (Vi) is already positioning itself financially, both to bid and to invest in its network, through a planned equity deal and a delay to AGR dues, among other plans.

Indian media outlets have reported that Vodafone Idea intends to delay the payment of AGR dues, amounting to Rs8837 crore (somewhere in the region of US$1.128 billion), by four years, taking advantage of the option offered earlier this month by the Department of Telecommunications (DoT). The final amount is now to be paid in six equal annual instalments starting from 31 March 2026.

Vodafone also hopes to raise Rs436.21 crore (about US$56 million) from its UK parent the Vodafone Group, either through equity shares or warrants convertible into equity shares. There are plans for an extraordinary general meeting on 15 July to get shareholder approval for the issue.

Another Rs10,000 crore (or US$1.276 billion) in equity is to come from an external investor. The same amount will come in the form of debt from lenders. These additional funds may, however, need to await the promised conversion by government of the company’s interest on accrued dues into 33% equity. 

Meanwhile Bharti Airtel, Reliance Jio and Vodafone Idea may all save between US$127 and US$300 million dollars each in spectrum usage charges after the government decided to remove the 3% floor rate on the statutory fee.

The estimated savings, though, are subject to the operators buying large chunks of 5G airwaves in next month’s auction – an additional incentive, perhaps, to buy into the sale. However, the operators still feel the reserve prices are too high.

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