Vodafone Idea seeks payment moratorium as Jio reports profits

Vodafone Idea looks to extend spectrum payment deadline as Jio reports profits

Vodafone Idea is looking to procure a two-year moratorium to pay off its spectrum fees as it faces mounting debt and falling profits.

The Economic Times reported that this year alone, the operator will need to pay INR100 billion ($1.4 billion) unless an extension is granted. The Department of Telecommunications has stated that it is reviewing the issue.

Speaking to the newspaper, a Vodafone Idea spokesperson said: “The telecoms industry is critical to fulfilling the digital aspirations of 1.3 billion Indians. Hence, it is important for it to be financially robust with multiple operators that can offer choice to citizens, ensure healthy competition and that national assets like spectrum are valued correctly.”

Vodafone India and Idea Cellular completed their merger in August 2018, creating a new market leader in the country with a market share of more than a third. Prior to this, the two operators had bid in five rounds of spectrum auctions, with Vodafone India spending a total of INR793 billion and Idea INR636 billion.

For its fiscal Q2 up to 30th September, Vodafone Idea registered an after-tax loss of INR49.7 billion. This prompted it to look issuing right to bring in as much as INR250 billion ($3.5 billion) in new capital - a plan that has now secured approval from its board.

Former market leader Bharti Airtel also saw falling sales and profitability across 2018. The only operator to register increased profits in any of the past three quarters was Reliance Jio, which saw its year-on-year net profit jump by 65% for its fiscal Q3 (end 31st December). Its revenue similarly rose by 51% to INR104 billion, and it gained 27.9 million subscribers in the quarter, bringing its total to 120 million new subscribers across 2018.

The operator’s chairman Mukesh Ambani said: “The Jio family is now 280 million strong and growing on one of the world’s largest mobile data networks, in line with our vision of connecting everyone and everything, everywhere. We are similarly working on re-inventing the connectivity solutions market for homes and enterprise with our next-generation FTTx services.”

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