New Delhi: Vodafone Idea It said on Wednesday that its board has approved to take advantage of the four-year spectrum payment moratorium being offered by the government as part of its relief package for the telecom sector.
Other options given in the DoT notification will be considered by the board of directors within the time frame prescribed, it said in a regulatory filing.
“… We would like to inform you that the Board of Directors of the Company has approved the exercise of the option of deferring the spectrum auction installments of the Company for a period of 4 years (October 2021 to September 2025). DoT Notification dated 14 October 2021 issued by (DoT) to the Company,” it said.
In line with the bold reforms announced recently for the telecom sector, the government last week wrote to telecom companies including Bharti Airtel, Vodafone Idea and others. Reliance Jio They have been asked to state by October 29 whether they will opt for the four-year outstanding moratorium.
It has given 90 days to the operators to indicate whether they wish to opt for converting the interest amount into equity relating to the moratorium period.
According to the letter sent to the telcos, with this option, the audited financial statements of the previous financial year (2020-21) will have to be submitted.
The government has introduced an option to defer the payment of spectrum auction installments for up to four years with immediate effect, except the installments due for spectrum auction 2021. This option is applicable from FY 2022-23 to FY 2025-26.
These deferred amounts will be distributed equally among the remaining installments to be paid, without any increase in the existing time period specified for making installment payments.
However, fixed interest will be charged in the respective year of auction of spectrum so as to protect the Net Present Value (NPV) of the amount payable.
The letters were sent by the Department of Telecommunications (DoT) to individual operators on Friday.
“The interest amount on account of deferred spectrum arrears arising out of protection of NPV, relating to the moratorium period, by way of equity, shall be utilized within 90 days of this notification,” the letter to DoT said. .
The letter also lays out the modalities for converting the interest amount into equity along with the fine print related to the option of moratorium of dues relating to deferred spectrum auction installments and AGR.
The method of arriving at the value and valuation for equity conversion of interest payable amount differs for listed and unlisted companies.
In one of the letters issued by DoT to a listed company, it was mentioned that equity shares would be issued by the company to the government on a preferential basis.
It was added that the NPV of the interest amount would be calculated as on the date of exercise of the option.
DoT had said that the interest amount will continue to be treated as loan to companies till the equity investment process is completed.
The government recently approved a blockbuster relief package for the sector including a four-year break from paying statutory dues for companies, permission to share rare airwaves, change in the definition of revenue on which levy is paid. and includes 100% foreign investment. automatic route.
It also aims to provide relief to companies like Vodafone Idea, which have to pay thousands of crores in unorganized past statutory dues, including waiving of spectrum usage charges (SUC) for airwaves received in future spectrum auctions.
For past dues, the government has allowed a moratorium or moratorium of up to four years in annual payments. But telecom companies will have to pay interest during the moratorium period.
Also, the Government will have the option to convert the deferred payment dues into equity at the end of the moratorium/moratorium period.
It has also given an option to the telcos to pay the interest amount arising on account of the said moratorium of payment by way of equity.
Bharti Airtel Chairman Sunil Mittal Last month, the company said the company would opt for a payment moratorium and aggressively redirect cashflows to network.
With regard to interest arrears on deferment of payment, Mittal had said that Airtel would decide when there is a proposal from the government whether to go for equity conversion mechanism or pay cash.
Other options given in the DoT notification will be considered by the board of directors within the time frame prescribed, it said in a regulatory filing.
“… We would like to inform you that the Board of Directors of the Company has approved the exercise of the option of deferring the spectrum auction installments of the Company for a period of 4 years (October 2021 to September 2025). DoT Notification dated 14 October 2021 issued by (DoT) to the Company,” it said.
In line with the bold reforms announced recently for the telecom sector, the government last week wrote to telecom companies including Bharti Airtel, Vodafone Idea and others. Reliance Jio They have been asked to state by October 29 whether they will opt for the four-year outstanding moratorium.
It has given 90 days to the operators to indicate whether they wish to opt for converting the interest amount into equity relating to the moratorium period.
According to the letter sent to the telcos, with this option, the audited financial statements of the previous financial year (2020-21) will have to be submitted.
The government has introduced an option to defer the payment of spectrum auction installments for up to four years with immediate effect, except the installments due for spectrum auction 2021. This option is applicable from FY 2022-23 to FY 2025-26.
These deferred amounts will be distributed equally among the remaining installments to be paid, without any increase in the existing time period specified for making installment payments.
However, fixed interest will be charged in the respective year of auction of spectrum so as to protect the Net Present Value (NPV) of the amount payable.
The letters were sent by the Department of Telecommunications (DoT) to individual operators on Friday.
“The interest amount on account of deferred spectrum arrears arising out of protection of NPV, relating to the moratorium period, by way of equity, shall be utilized within 90 days of this notification,” the letter to DoT said. .
The letter also lays out the modalities for converting the interest amount into equity along with the fine print related to the option of moratorium of dues relating to deferred spectrum auction installments and AGR.
The method of arriving at the value and valuation for equity conversion of interest payable amount differs for listed and unlisted companies.
In one of the letters issued by DoT to a listed company, it was mentioned that equity shares would be issued by the company to the government on a preferential basis.
It was added that the NPV of the interest amount would be calculated as on the date of exercise of the option.
DoT had said that the interest amount will continue to be treated as loan to companies till the equity investment process is completed.
The government recently approved a blockbuster relief package for the sector including a four-year break from paying statutory dues for companies, permission to share rare airwaves, change in the definition of revenue on which levy is paid. and includes 100% foreign investment. automatic route.
It also aims to provide relief to companies like Vodafone Idea, which have to pay thousands of crores in unorganized past statutory dues, including waiving of spectrum usage charges (SUC) for airwaves received in future spectrum auctions.
For past dues, the government has allowed a moratorium or moratorium of up to four years in annual payments. But telecom companies will have to pay interest during the moratorium period.
Also, the Government will have the option to convert the deferred payment dues into equity at the end of the moratorium/moratorium period.
It has also given an option to the telcos to pay the interest amount arising on account of the said moratorium of payment by way of equity.
Bharti Airtel Chairman Sunil Mittal Last month, the company said the company would opt for a payment moratorium and aggressively redirect cashflows to network.
With regard to interest arrears on deferment of payment, Mittal had said that Airtel would decide when there is a proposal from the government whether to go for equity conversion mechanism or pay cash.
.