Relief news is coming for crores of customers and investors of Vodafone Idea (Vi). If you also use Vi SIM and were worried about the future of the company, then the government’s new scheme has brought a ray of hope for you. According to reports, the government is preparing to provide big relief to this telecom company which is facing cash crunch. In this, not only can longer time be given to repay the loan, but there is also a possibility of huge reduction in the total loan amount.
You may get extra time to repay the loan
According to the latest information, the government is considering giving a ‘moratorium’ of 4 to 5 years to Vodafone Idea on its Adjusted Gross Revenue (AGR) dues. If understood in simple language, it means that the company will not have to pay the installment of this dues for the next 4-5 years. The most important thing is that this moratorium can be ‘interest free’. At present the company has statutory dues of more than Rs 83,000 crore.
Under current rules, Vi has to pay installments of more than Rs 18,000 crore in March. If the government approves this relief package, then the company will be freed from the worry of arranging such a huge amount immediately. The company will be able to invest this money in improving its network and improving 5G services, which will directly benefit the common customers.
Will Vodafone Idea’s burden be halved?
Not only the time, the government is also considering reducing the total amount of loan. According to the Economic Times report, after re-assessment of liabilities, the company’s outstanding may be reduced to almost half. A special committee will be formed for this. This committee will be headed by a Secretary level officer, who will hear the views of both the Department of Telecommunications (DoT) and Vi.
This committee will decide how much amount the company will have to pay in the end. When the period of 4-5 years is over, the company will have to pay the remaining amount in 6 installments. The interesting thing is that no new interest will be added on this dues in future, due to which the burden of the company will not increase further. Keep in mind that till now the company had to pay huge compound interest of 29-30% annually on the outstanding amount.
Mathematics of government’s share
The government itself is the largest shareholder in Vodafone Idea and holds 48.99% stake in the company. This effort of the government is also important because the company is in dire need of new investment. If this relief package is passed, it will be easy for the company to raise Rs 25,000 crore from the market.
There are also reports that a New York-based private equity firm ‘Tillman Global Holdings’ is in talks to make a big investment in Vi. This investment could be between Rs 35,000 to Rs 52,800 crore ($4-6 billion). However, investors will invest money only when they are confident that the government will not let the company sink. The Supreme Court had also recently given permission to the government to prepare a special package for this troubled company. This decision can be officially announced in the coming few weeks after cabinet approval.
