Vodafone Group has accelerated a USD200 million payment to its Indian joint venture Vodafone Idea, after the company missed the deadline for the submission of dues relating to its Adjusted Gross Revenue (AGR) liabilities. The UK-based parent stressed, however, that the payment did not represent a reversal of its position on the provision of additional funding to the unit. Vodafone Group officials have stated on several occasions since the October 2019 decision on AGR that it would not be infusing further capital into the company.
In a press release from the group, Vodafone explained that the payment had been due in September 2020 as part of the contingent liability mechanism (CLM), part of the agreement between Vodafone Group and Aditya Birla Group for the merger of their Indian mobile operations and covered reimbursements for certain identified pre-merger liabilities and assets. Under the terms of the CLM Vodafone Group is obliged to make payments to Vodafone Idea where amounts paid in relation to the liabilities of Vodafone India exceed those of Idea Cellular. Vodafone’s potential exposure through the mechanism is limited to INR84 billion (USD1.1 billion), the British group added.
According to the Economic Times, earlier this week Vodafone Idea paid INR13.7 billion to the government in licence and spectrum fees for the quarter ended 31 March 2020. In its statement on the CLM funds, Vodafone Group explained that it had ‘accelerated this payment to provide Vodafone Idea with liquidity to manage its operations, and to support the approximately 300 million Indian citizens who are Vodafone Idea customers as well as the thousands of Vodafone Idea employees during this phase of emergency health measures, taken as a result of the COVID-19 pandemic.’