A customer at a Vodafone store in Mumbai. Photo: AFP

India’s Vodafone Idea has decided to use the spectrum payment moratorium offered by the government. As part of its relief package for the telecom sector, the government offered a four-year moratorium – from October 2021 to September 2025 – on spectrum payments.

In a regulatory filing, the troubled telecom company said its board had approved using the government offer and its directors will look into other options offered in the Telecom Department’s notification dated October 14.

Last week the government wrote to Bharti Airtel, Vodafone Idea and Reliance Jio, giving them until October 29 to decide if they would be opting for the four-year dues moratorium.

However, the telecom companies would have to pay interest during the moratorium period. The government gave 90 days to the operators to indicate if they wanted to opt for converting the interest amount to the moratorium period into equity.

The other measures announced by the government include permission to share scarce airwaves, a change in the definition of revenue on which levies are paid and 100% foreign investment through the automatic route. It also scrapped the Spectrum Usage Charge for airwaves acquired in future spectrum auctions.

Vodafone Idea has a total gross debt of 1.91 trillion rupees. The debt comprises deferred spectrum payment obligations of 1.06 trillion rupees and an adjusted gross revenue liability of 622 billion rupees that are due to the government and debt from banks and financial institutions of 234 billion rupees.

Vodafone Idea is now the third-largest telecom operator in India with a subscriber base of 271 million and trails Reliance Jio (444 million users) and Bharti Airtel (354 million). The company has been plagued by subscriber loss for many years, but now it appears that in August it had slowed down to 833,000 subscribers, against 1.43 million subscribers in July.

Reliance Jio added 650,000 subscribers in August.

Bharti Airtel Chairman Sunil Mittal last month said the company will opt for a payment moratorium and redirect the cash flow to aggressively build networks.