Vodafone Idea has made a payment of Rs 1,701 crore to the Department of Telecommunications towards the 2022 Spectrum Auction Instalment. The payment was made in accordance with the terms mentioned in the Notice Inviting Applications dated June 15, 2022.
Earlier, on August 14, Vodafone Idea had received a communication from a promoter group entity stating that it would provide financial support of Rs. 2,000 crore in case the company required funds to meet its pending payment obligations.
CARE Ratings revised the outlook assigned to the long-term bank facilities and instruments of Vodafone Idea Limited from ‘Positive’ to ‘Stable’ on August 24. This revision was due to a delay in fund raising and the reaffirmed ratings take into account factors such as the experienced management team, pan-India telecom presence, stable outlook for the Indian telecommunications industry, and the commitment of the promoter groups (Aditya Birla group and Vodafone group Plc) in assisting the company.
The ratings also consider the majority shareholding (33.14% as of June 30, 2023) of the Government of India through the Department of Investment and Public Asset Management. Additionally, a commitment was received from a promoter group entity for direct or indirect financial support of Rs 2,000 crore to address any cash flow mismatch.
However, the ratings reflect Vodafone Idea’s deteriorated financial risk profile, including the erosion of its tangible net worth and a continuously declining subscriber base. The company’s efforts to gain market share through the expansion of 4G services and timely rollout of 5G services have been dampened due to the delay in raising funds, both debt and equity.
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