Difficult for Vodafone Idea to pay upfront AGR dues: Credit Suisse

New Delhi: Vodafone Idea will find it challenging to pay more than Rs 50 billion of incremental upfront dues in the AGR dues, according to brokerage, Credit Suisse.

In a report it said that after having paid Rs 69 billion of AGR dues, estimate is that Vodafone Idea would have Rs 60 billion of cash balance as of March 2020 assuming no incremental capex in fourth quarter of financial year 2020.

"With VIL not having access to incremental debt funding, it would be difficult for VIL to pay more than Rs 50 billion of incremental dues. On the other hand, having already paid 48 per cent of dues, incremental upfront payment will not be a problem for Bharti Airtel especially post the recent capital raise and declining leverage on back of improving profitability," Credit Suisse said.

VIL cash flow situation will be challenging post FY22. "We believe that VIL can manage its cash flow needs till FY22 on account of a two year moratorium (FY21 and FY22) on deferred spectrum debt. However, we believe the company may find it challenging to service the AGR dues beyond FY22," the report said. The report said that an ARPU of Rs 200 on subscriber base of 280 million would generate Rs 250 billion EBITDA after building in 300 bps reduction in license fees. (IANS)

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