UK-based Vodafone Group said it has accelerated a payment of $200 million to Indian telco Vodafone Idea, which was due in September 2020 under the terms of the contingent liability mechanism (CLM) with Vodafone Idea.
“ Vodafone Group has accelerated this payment to provide Vodafone Idea with liquidity to manage its operations, and to support the approximately 300 million Indian citizens who are Vodafone Idea customers as well as the thousands of Vodafone Idea employees during this phase of emergency health measures, taken as a result of the COVID-19 pandemic,” said the company in a statement.
Vodafone Idea manages around 300 million odd customers and almost 14,000 employees.
Following the decision by India’s Supreme Court on the definition of Adjusted Gross Revenue (AGR) in October 2019, India’s telecoms operators became liable for licence fees, penalties and interest dating back over 14 years. Vodafone Idea made payments to the Government of India in relation to its AGR liabilities.
Under the terms of the contingent liability mechanism (CLM), Vodafone Group is obliged to make payments to Vodafone Idea where amounts paid pursuant to the contingent liabilities of Vodafone India exceed those of Idea Cellular. The CLM took effect at completion of the merger of Vodafone India and Idea Cellular in August 2018.
Earlier this week, Vodafone Idea submitted about ₹1,367 crore to the government towards licence fee and spectrum usage charges (SUC) payment for the March 2020 quarter. It made the payment as no extension in timeline was granted on the dues, after the Cellular Operator’s Association of India’s (COAI) submissions to the Department of Telecommunications (DoT) requesting an extension of the March 25 deadline for AGR-based payments due to the strain on human resources on account of Covid-19.
Rajan Mathews, Director General, COAI also noted that telecom companies are playing a critical role in addressing the challenges faced by individuals, corporates, governance services, emergency & utility services etc during Covid-19 pandemic. There has been a severe disruptive impact on the global supply chain, demand & supply elements and most importantly, on the cash flows of the companies due to the slowing economic activities. This downturn will have an impact on all payments including those of employees, interest, loan repayments and taxes.”
This article was first published on livemint.com.