Vi or Vodafone Idea has cleared its past license fee and spectrum usage charge dues with the telecom ministry in India. The debt-ridden telecom operator has managed to do so with the help of HDFC Bank’s Rs 2,000 crore funding. According to an ET report, fresh funding has helped the telecom company meet past overdue license fees and 5G spectrum payment commitments. This has also brightened Vi’s prospects of attracting more equity infusion by December end. Let’s take a look at all the details of the recent development.
Vodafone Idea Clears Past Dues With The Help of HDFC Bank
Notably, the Rs 2,000 crore loan extended by HDFC Bank comes when Vi’s main lender group, led by State Bank of India, has put its foot down. According to the report, the lender group has asked the loss-making telecom operator to put more promoter equity commitment before releasing any fresh funds to the company. According to a report in September, the main lenders led by SBI had asked Vodafone Idea or Vi promoters to infuse more equity for the telco to qualify for future loans. The lenders said that it’s not possible to advance the Rs 2,000 crore financial report due to the weak credit rating of Vi.
However, HDFC Bank has now advanced the loan to the telecom operator with a tenure of two years. According to the report, the fund was disbursed to the telecom company in mid-September. A source told ET that HDFC has talked with the main lenders of Vi to ensure that if Vi faces issues with payments in the future, the repayment of the HDFC Bank loan will not be impacted.
This funding has helped Vodafone Idea meet the deadlines for its loan and statutory payment commitments. Notably, according to a report from PTI back in August, the telco had committed to clear around Rs 2,400 crore of dues to the government by September. This included “dues for the June 2023 quarter and spectrum installment with applicable interest by September.”
Now, the latest ET report cites telecom ministry officials to confirm that the telco has paid over Rs 350 crore for past license fees (LF) for the years 2022 and 2023, along with around Rs 1,700 crore toward spectrum usage charges SUC). The same report also cites a letter from Vi to the telecom department dated October 31 to reveal that the company has already paid off “10% of LF and SUC on 13.10.2023, and we will make the balance payments for the quarter ending September 2023 by the end of December 2023, along with interest.”
According to the report, Vi has been meticulous with its bank debt and has not defaulted on it ever. However, the larger government dues are the ones causing grief for the company.