Vodafone Idea falls behind on its licence and SUC payments

Vodafone idea SUC fees
Image by Asti Mak | Bigstockphoto

India’s Department of Telecommunications (DoT) will soon send a notice to cash-strapped Vodafone Idea seeking a tentative date for making the full payment of its licence fee and spectrum usage charges (SUC) for the October-December quarter.

Vodafone Idea has already missed the January 15 deadline, and has reportedly paid only around 10% of its statutory dues for the period.

The telco’s payment for previous quarters amounted to Rs 600-800 crore ($74-$98 million) for the licence fee (LF) and about Rs 250 crore ($31 million) for SUC. As per norms, Indian telecom operators pay 8% and 3-4% of their adjusted gross revenue (AGR) as the licence fee and SUC, respectively.

No demand note or penalty

“Through the notice, we will ask the company to share the entire amount, which needs to be paid as statutory dues for the December quarter and the tentative date for the payment,” a government official was quoted as saying by the Economic Times.

However, he added that the DoT will not send a demand notice, as telcos make payments on a self-assessment basis.

The DoT will not levy any penalty on Vodafone Idea, which now needs to indicate a tentative date for making payments. It will need to at least pay interest on the amount accrued to DoT for delayed payment.

Vodafone Idea gets a lifeline

Vodafone Idea has been struggling to raise funds from external investors. However, last week, the DoT converted the telco’s accrued interest on deferred AGR dues worth Rs 16,133 crore ($1.99 billion) into equity.

That move means the Indian government is now the largest stakeholder in Vodafone Idea with a roughly 33% stake. That said, the government says it has no plans to have management control of Vodafone Idea or occupy a seat on its board.

The equity conversion also threw Vodafone Idea a lifeline, as it could help it revive talks with investors and banks. Vodafone Idea’s promoters – Aditya Birla Group and Vodafone Plc—may infuse over Rs 5,000 crore, which will enable the telco to raise funds from external investors.

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