Voda Idea to seek to convert dues into equity after moratorium ends: JP Morgan

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₹18,000 crore in a follow-on public offer in April.In a note to clients, JP Morgan said that the company expects to have adequate cash to repay annual government dues starting FY28.“Vodafone Idea believes that post moratorium-end next year and spectrum payments restarting, it will need government support in FY26/27 and after that it believes its cash generation should be sufficient to repay annual government dues," analysts at the brokerage said in the note seen by Mint.The Aditya Birla Group-promoted telecom services provider owes the government $24.5 billion or more than ₹2 trillion for spectrum bought in prior auctions as well as dues from adjusted gross revenues or AGR, that it needs to start repaying. In FY26, it must pay $3.5 billion, then $4 billion each year from FY27 to FY31.“Given its cash crunch, it is in favour of converting the deferred amount ($3.5 billion) of this debt into equity from FY26, which we assume happens at ₹10 per share, driving dilution," the analysts added.

Despite this payment, it would still be saddled with a $21 billion debt.Vodafone Idea chief executive Akshaya Moondra had told Mint in an interview ahead of the FPO that it may seek government support based on its ability to pay the dues when the moratorium ends. “This will not be every year but in the initial couple of years the possibility could be high," Moondra had said.The country's third-largest telecom operator by subscribers had opted for a four-year moratorium on payments for 5G spectrum bought in the last auctions in 2022, which was offered by the government as part of a reforms package to improve the financial health of the telecom sector.