Vodafone Idea seeks time to pay mobile network fees

VODAFONE’S India unit has urged the Indian government to allow more time to the telecom company to pay mobile network fees.

Its creditor banks have also requested the government to be little flexible with the firm.

The debt-ridden joint venture has long been facing tough competition in the Indian market from Bharti Airtel and Reliance Jio.

In an analysts call on Friday (2), Vodafone Idea said it has requested the Department of Telecommunications for a year's extension to pay Rs. 82.9 billion (£804 million) in mobile network fees due in April 2022.

The firm cited low tariff rates and other business environment challenges for its inability to generate sufficient cash from its operations.

"I think it is only reasonable to say to the government that they have to provide an extension to the moratorium until these pricing-related issues and the stress in the industry and the sector is removed," Vodafone Idea chief executive officer Ravinder Takkar said.

Moreover, Indian banks with large outstanding loans to the company have also reportedly written to the finance ministry expressing fears about the venture slipping into bankruptcy, if more time is not granted for the upcoming payments.

Vodafone Idea's total debt stood at Rs. 1.86 trillion (£18.05bn) at the end of March 2021.

Besides, the company has been unable to meet its fundraising target of Rs. 250 billion(£2.4bn) announced last September.

Telecom firms in India are struggling for survival since 2016, when the Mukesh Ambani-led Reliance Jio was launched.

Ambani's promise of providing dirt-cheap internet and free calls to Indians triggered a brutal price war in the country.

"I think the biggest hurdle is that the overall industry is under stress because of the pricing situation," Takkar said, echoing comments by Sunil Mittal, the billionaire chairman of Bharti Airtel.

"To say the telecom industry is in a bit of trouble is an understatement," Mittal said on Thursday (1).

Vodafone Idea is a partnership between British telecom major Vodafone and Indian conglomerate Aditya Birla.

The firm reported a net loss of Rs. 69.85 billion (£677m) for the quarter ending March 2021.