Vi requests extra time for spectrum payment

2 Jul 2021

Indian mobile provider Vodafone Idea (Vi) has written to the Department of Telecommunications (DoT) to request a moratorium on spectrum payments for a year, citing the financial burden of its dues relating to the long-running dispute over Adjusted Gross Revenue (AGR) and the overall health of the industry. The Economic Times writes that the cellco explained that it need an extra year to pay the INR82.92 billion (USD1.11 billion) in spectrum related fees it is scheduled to pay in April 2022 on the grounds that the AGR demands have hampered its liquidity whilst ‘predatory pricing’ is deterring investors and preventing it from raising the necessary funds through its operations. ‘We [have been] working on raising new funding for the last six months but the investors are not willing to invest in the company because they believe that unless there is significant improvement in the consumer tariffs, the health of the industry will not recover and they will incur a loss on their investment,’ the operator stated in its letter.

A series of price wars in recent years have kept tariffs low but industry executives have repeatedly stated that the situation is unsustainable in the long term, and have criticised the lack of meaningful intervention from the Telecom Regulatory Authority of India (TRAI) in the matter. Indeed, in a separate development Sunil Mittal, the chairman of rival provider Bharti Airtel, was quoted as saying of the matter this week: ‘To say the telecom industry is in a bit of trouble is actually an understatement. It is in tremendous amount of stress.’ The official described the industry-wide drop in ARPU following the launch of Reliance Jio Infocomm (Jio) in September 2019 as ‘totally unsustainable’.