DoT to serve show-cause notice on Vodafone Idea over licence fee delay

Telco claims dues paid for first quarter

The Department of Telecommunications (DoT) is in the process of issuing a show-cause notice to Vodafone Idea (Vi) for delaying the payment of licence fee.

Companies pay 8 per cent of their adjusted gross revenue as licence fee. This also includes a universal service obligation levy. The fee is collected from each of the 22 telecom circles in the country on a quarterly basis. The department issues notice, even if there is a single day’s delay in payment.

“Vi has paid its licence fee dues for the first quarter of 2021-22,” a spokesperson for the company said, without divulging further.

This is the second consecutive quarter when Vi has failed to make timely payment in full, prompting DoT to seek an explanation. A notice will be issued in a day or two, said a government official.

These challenges come as the debt-ridden company battles intense competition and low tariffs. Vi has a debt of around Rs 1.9 trillion. Rating agency CARE Ratings has downgraded the rating on long-term bank facilities and non-convertible debentures. According to reports, banks, too, are asking for additional collaterals and higher interest in view of the downgrade.

While analysts have raised concerns over the deteriorating financial health of the company in view of increased losses and market-share erosion, industry body Cellular Operators Association of India has petitioned the government to cut taxes and introduce relief measures for the telecom sector. The proposal includes recommendations on doubling the tenure of auctioned radiowave holdings, along with a 7-10-year moratorium for spectrum payments to address viability concerns.

"Ensure reasonable reserve prices, easier payment terms, in the form of doubling the tenure of all auctioned spectrum holdings - both existing and future from 20 years to 40 years -without any additional amounts, and also consider 7-10-year moratorium for present and future spectrum payments,” said the association, whose members include Vi, Bharti Airtel, and Reliance Jio.

 With inputs from PTI