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    Vodafone Idea may deposit up to Rs 2,000 crore to get staggered payments benefit

    Synopsis

    Credit Suisse estimated that without access to incremental debt funding, Vodafone Idea could at best pay Rs 5,000 crore of incremental dues. The telco owes over Rs 58,000 crore in licence fees, spectrum usage charges, interest and penalties, of which it has paid almost Rs 7,000 crore.

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    NEW DELHI: Vodafone Idea may deposit Rs 1,000-2,000 crore as an upfront amount to get the benefit of staggered payments of its adjusted gross revenue dues, analysts said, adding that the Supreme Court's observations on Thursday have added to optimism about the cash-strapped telco's survival.

    The company can get funds from its parent and from the sale of its stake in Indus Towers, which is being merged with Bharti Infratel, according to ICICI Securities.

    "VIL can source funds from Vodafone Plc's unpaid indemnity of Rs 67 billion and can receive Rs 36 billion for its Indus stake on merger between Bharti Infratel and Indus," ICICI Securities said in a note. "In our view (this amount) would satisfy the SC since the company's balance sheet position would justify it as 'reasonable' payment."

    Credit Suisse estimated that without access to incremental debt funding, Vodafone Idea could at best pay Rs 5,000 crore of incremental dues. The telco owes over Rs 58,000 crore in licence fees, spectrum usage charges, interest and penalties, of which it has paid almost Rs 7,000 crore.

    The top court said on Thursday that operators must make an upfront payment to avail of a payment timeline staggered over 20 years to pay their dues, as proposed by the government.

    The Vodafone Idea stock fell 6.4% to Rs 9.14 at the close on the BSE on Friday. The Sensex gained 1.5%.

    SBICAP Securities said if Bharti Airtel's payment of 40% of pending AGR dues is taken as the benchmark for a 'reasonable' amount, VIL will need to pay an additional Rs 17,000 crore.

    That will be tough for the company, given its already stretched balance sheet, with net debt of over Rs 1.03 lakh crore amid falling revenue and widening losses.

    "However, if the upfront payments are about 20-25% of overall dues, the company may have a few options," the house said.

    Axis Capital said Bharti Airtel is better placed to make an upfront payment because it had Rs 13,600 crore in cash at the end of March, has assets available for monetisation and can raise funds from the market.


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