Vodafone Idea’s chief executive officer, Akshaya Moondra, said on September 23 that the struggling telecom operator has initiated "fresh dialogues" with the government after the Supreme Court's decision did not favour it in the re-computation of Adjusted Gross Revenue (AGR) case.
Moondra said that the industry will need another round of tariff hikes to improve its ability to generate cash flow. He added that the telecom operator expects the debt funding to conclude in seven to eight weeks.
"Have initiated fresh dialogue with government on likely remedies," Vi CEO Akshaya Moondra said in an investors' call, adding that the telco's long-term business plans and strategy will remain unaffected despite the negative outcome of the curative pleas. "For the AGR dues case we believe this will be the final outcome from the court. The action on AGR dues now falls onto the government. We are in the process of putting a request with the government for AGR dues."
Moondra spoke during an investor call a few days after the Supreme Court rejected 19 petitions filed by 19 telecom operators, including Bharti Airtel and Vodafone Idea, for the re-calculation of adjusted gross revenue (AGR) dues.
“The outcome of the curative petition is disappointing but does not impact the company’s long-term business plan and existing liabilities,” the CEO said, adding that the firm has started a fresh dialogue with the government for a possible remedy.
The ruling is considered a significant setback for telecommunications companies, especially Vodafone Idea, which is cash-strapped and owes the government thousands of crores in fees.
"We are putting together requests in the coming days. We expect a very strong engagement with the government. We are pursuing further remedies with the government. We have been engaging senior government officials even before the court judgement...we know there are several options and several possibilities. The intent is to find a way that works best for everybody in the industry," said Ravindra Takkar, chairman of Vodafone Idea.
Vodafone Idea on September 22 awarded a mega $3.6 billion deal with Nokia, Ericsson, and Samsung to supply network equipment over three years, marking the first step towards the rollout of the company’s three-year capex plan of $6.6 billion, which is directed towards expanding the 4G population coverage from 1.03 billion to 1.2 billion, launching 5G in key markets and expanding capacity in line with data growth.
Moondra said the telco expects 4G and 5G equipment deliveries to start in the second half of next quarter. "...the deployment will begin and continue in full flow. There is some lead time for vendors to take orders and start supplying," he said, adding that the telco will likely start seeing subscriber metrics improve with network deployment.
"Vodafone Idea has activated its growth cycle with the kickstart of the network expansion. A large part of cash generation will go towards government obligations...towards the end of the financial, the rollout would be significant and should see a significant change in customer experience," Moondra added.
Vodafone Idea has 5G spectrum in 17 circles and will launch 5G in all these circles. "We are not looking at selective circles...we will keep looking at market factors and accelerate or slow down our 5G deployment plan. We are going to cover key markets where there is a large penetration of devices and high data traffic," he said.
Despite the availability of 5G by its top two rivals at the pan-India level, Moondra said that monetisation of 5G is still not happening due to unmetered 5G usage through discounts. "...we have seen very few use cases of 5G for consumers."
The executive also clarified that the conversion of dues to equity for Ericsson and Nokia was a one-time exercise. "New supplies will be covered under a new contract and do not involve equity," he said.
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