Vodafone Idea considers looser payment terms after Indus Towers warns of disrupting tower access

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Telecoms operator Vodafone Idea released a statement on Thursday saying it was in talks with Indus Towers over dues clearance, failing which the telecoms operator could lose access to the round.

Telecoms operator Vodafone Idea released a statement on Thursday saying it was in talks with Indus Towers over dues clearance, failing which the telecoms operator could lose access to the round.

“Indus Towers Limited is one of the major providers providing passive infrastructure services to society. The company has been in discussions with Indus for more flexible payment terms, which are ongoing, but have not yet been finalized,” Vi said in an exchange filing.

The statement came a day after sources told CNBC-TV18 that the board of Indus Towers had warned Vi of the closure of the service for non-payment of Rs 7,000 crore dues.

Following a board meeting on Monday, the Indus Towers board expressed concern over increased dues and non-payment by Vi. He wrote to the phone company asking for immediate repayment of the arrears and has asked for regular payment from now on, the sources said.

The letter highlighted three main concerns. The first is that the entire Independent Board was very upset about the long outstanding backlog which they want to see resolved as soon as possible.

Moreover, the telecom operator has only been paying 40 to 50% of the arrears for a few months. The board insisted that Vi pay nearly 80-90% of the monies owed and, from November, make a 100% payment to ensure that Indus Towers continues to provide its services.

Third, if Vi fails to pay dues after November, there is a clear risk that services will be disrupted.

If the tower company shuts down tower access to Vi, services to the cash-strapped telecommunications company’s more than 255 million subscribers will be seriously affected. The warning comes as the company had made a bad debt provision of Rs 1,232.6 crore in the April to June quarter.

It is not yet known whether Vi’s promoter entities will be able to inject fresh capital into the cash-strapped telecommunications company. Another concern for the company is whether the government will convert the rights to use the spectrum into shares. Until the promoters of Vi do not inject money, the government is reluctant to invest and convert the rights to use the spectrum into shares.

Meanwhile, if Vi faces a service disruption from the end of Indus Towers after November, it’s unclear what will happen to its services.

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