Vodafone Idea, a leading telecom operator in India, has announced that it has made a payment of Rs 1701 crore towards the annual installment for spectrum acquired in the 2022 auction. This payment is the second installment for the spectrum purchased in last year’s auction, where Vodafone Idea had acquired 5G spectrum in the 3300 MHz and 26 GHz frequency bands for Rs 18,799 crore.
The company made the payment to the Department of Telecommunications in response to the requirement outlined in the spectrum auction rules. Under the auction rules, if the spectrum payment is not made by the due date, a higher interest rate of 15% automatically applies. Vodafone Idea had availed a one-month grace period to make the payment.
The ongoing liquidity concerns of Vodafone Idea have impacted the rollout of its commercial 5G services. The delay in making the spectrum payment has further added to the challenges faced by the telco. In August, Vodafone Idea had indicated that it would pay the second installment of the 5G spectrum dues during the grace period.
To address the funding gap, Vodafone Idea had mentioned that one of its promoters, either Vodafone Group or Aditya Birla Group, would provide financial support of up to Rs 2000 crore if needed. It is speculated that the fund infusion would come from the Indian promoter, but no official confirmation has been provided.
Industry experts have highlighted that Vodafone Idea is under pressure to clear the spectrum installment with interest after the grace period. Failure to make the payment within the specified period can result in consequences such as termination of spectrum assignment, license termination, or prohibition from participating in future auctions for a period of three years.
Vodafone Idea had chosen to clear its 5G spectrum dues to the government in 20 equal installments. The first installment of Rs 1680 crore was paid in August 2022, and the spectrum was allotted to the company in September 2022.
– ET Telecom