The government abandoned fundraising efforts and did all in its power to help Vi: Vaishnav Ashwini

The government abandoned fundraising efforts and did all in its power to help Vi: Vaishnav Ashwini

The telecom business, which is experiencing financial difficulties, sent an invitation to its shareholders on March 5 to attend an extraordinary general meeting (EGM) on April 2, with the purpose of approving the company's intention to raise Rs 20,000 crore in equity funds.

Union Minister of IT and Communications Ashwini Vaishnav said in an interview with Moneycontrol that the government would back Vodafone Idea's proposal to borrow Rs 45,000 crore in debt and equity, including funds from its promoters. According to him, the government has supported the struggling telecom operator with every action it has made so far.

"We want to support any and all fundraising initiatives that Vodafone Idea wishes to do. I won't remark on its future since it is a publicly traded corporation. From the government's perspective, what matters is that we have taken all reasonable steps, Vaishnav said.

According to a recent Moneycontrol story, anchor investors have committed to provide Vi over $1 billion (about Rs. 8200 crore) in stock. The telecom business, which is experiencing financial difficulties, sent an invitation to its shareholders on March 5 to attend an extraordinary general meeting (EGM) on April 2, with the purpose of approving the company's intention to raise Rs 20,000 crore in equity funds.

In the next quarter, the telecom operator hopes to wrap off the equity financing after getting all the required permissions. In this round, company promoters will also take part.

After obtaining the required finance, Vodafone Idea said on its January 30 earnings call that it will offer 5G services in six to seven months. In four important circles—Delhi, Chennai, Pune, and Punjab—the telecom operator has fulfilled its 5G minimum roll-out duties with success. In the next months, it has requested that the DoT fulfill the standards in four to six more circles.

Vaishnav emphasized that because demand is anticipated to be restricted to spectrum that is up for renewal in a few circles, telecom providers would likely react slowly to the impending spectrum auction.

The Department of Telecommunications published a Notice of Application Invitation (NIA) document on March 8 that states the next spectrum auction in India would start on May 20.

We anticipate renewal demand, mostly from businesses wishing to extend their spectrum.In addition to wanting to upgrade, other individuals have expressed a desire to close certain gaps in the spectrum," he said.

Additionally, the government will put up for auction a variety of businesses that are facing bankruptcy and whose licenses expire in 2024. "Some spectrum tied to participating companies in NCLT as well as have expired will also become available."

The minister said that telecom companies would be able to provide higher-quality service with more spectrum availability. The auction will include all available spectrum in the 26 GHz and the 800, 900, 1,800, 2,100, 2,300, 2,500, and 3,300 MHz bands, with a starting price of Rs 96,317.65 crore. The reserve prices for different bands have been updated using the proper indexation in accordance with TRAI guidelines.

Spectrum winners, as per the March 8 NIA document, will be required to make the payment, either in whole or in part, within ten days of receiving the demand notice. They will have the option to choose for 20-year installment plans at an interest rate of 8.65%. It is also possible to get a moratorium based on upfront payment and future installment payments.

For twenty years after the auction, there won't be a spectrum use fee (SUC) on the acquired spectrum. The carriers will need to buy it back from the government after this time.

After a year from the date of frequency assignment, telecom service providers may lease, trade, or share the acquired spectrum, with surrender options offered, per the NIA document.

The government has put up 72,097.85 MHz of spectrum with a 20-year validity term in the most recent spectrum auction that took place in 2022. In terms of 5G spectrum, Reliance Jio invested Rs 88,078 crore, Bharti Airtel spent Rs 43,084 crore, as well as Vodafone Idea spent Rs 18,799 crore.