Vodafone Idea informed the Department of Telecommunications (DoT) that it has accepted a four-year payment moratorium on its spectrum dues.

The company is the first to notify DoT that it has accepted the government's telecom revitalization package, which includes postponing payment of spectrum installments while keeping the net present value (NPV) unchanged.

Telcos have until October 29 to declare if they want to take advantage of a payment freeze on spectrum dues and adjusted gross income (AGR). DoT has given them 90 days to explore converting the interest that will accumulate during the moratorium into equity.

While Vi has opted to take use of a spectrum dues moratorium, however, it has yet to make the same decision on AGR.

The government has also informed the enterprises about debt-to-equity conversion methods, as well as the relevant date for pricing the shares and the price formula.

Therefore, the board of Vodafone Idea will consider the other options in the revival package, such as deferring the payment of AGR dues for four years and offering equity to the government in lieu of interest accrued, and confirm its acceptance within the specified time frame, according to the company.

"In accordance with paragraph 2 of the notification dated October 14 issued by DoT to the company, the board of directors of the company has approved the exercise of the company's option of deferment of the company's spectrum auction installments for a period of four years which is from October 2021 to September 2025”, says VIL.

Regarding the accrued interest component, it will be converted into equity by invoking Section 62 (4) of the Companies Act, according to DoT, and the sum will be classified as a loan until the conversion is completed. The deadline for Cabinet approval will be August 14, a month before the deadline.

The equity shares will be issued to the government on a preferential basis by the company. The company will also provide specifics about the interest amount, which will be certified by the DoT. “The interest amount's NPV will be determined as of the date of option exercise. The interest amount will be classified as a loan to the corporation until the equity infusion procedure is completed, according to the DoT.

“For the valuation of shares or equity, the higher of the average of weekly high and low of the volume-weighted average price of equity shares during the last 26 weeks preceding the relevant date, subject to the provision under Section 53 of the Companies Act (meaning shares cannot be less than par value)”, adds DoT.

In addition, the government has allowed additional finance headroom, allowing the business to fund its annual license fee and spectrum usage charges of about Rs 4,000 crore at MCLR plus two percent without penalty.