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Contingency Mechanism: Vodafone Idea will get Rs 1,530 crore from Vodafone Plc

Vodafone Idea on Tuesday paid round Rs 1,367 crore to the division of telecommunications (DoT) in the direction of its licence price and spectrum utilization cost .

Vodafone Plc on Wednesday mentioned it has accelerated a fee of $200 million (about Rs 1,530 crore) to Vodafone Idea, due in September 2020, below the phrases of the ‘contingent liability mechanism’. This isn’t any recent fairness infusion within the firm however a part of contingent legal responsibility mechanism entered between Vodafone and Idea Cellular on the time of merger, whereby Vodafone Group wanted to pay for adjusted gross income dues if the quantity paid exceeded that of Idea Cellular.

Vodafone Group mentioned that following the choice of Supreme Court on the definition of adjusted gross income (AGR) in October 2019, India’s telecom operators grew to become chargeable for licence charges, penalties and curiosity courting again over 14 years. “Vodafone Idea has made payments to the government of India in relation to its AGR liabilities. Under the terms of CLM, Vodafone Group is obliged to make payments to Vodafone Idea where amounts paid pursuant to the contingent liabilities of Vodafone Idea exceeded those of Idea Cellular. The CLM took effect at completion of the merger of Vodafone India and Idea cellular in August, 2018,” the corporate mentioned.

“Vodafone Group has accelerated this payment to provide Vodafone Idea with liquidity to manage its operations, and to support the approximately 300 million Indian citizens who are Vodafone Idea customers as well as the thousands of Vodafone Idea employees during this phase of emergency health measures, taken as a result of the Covid-19 pandemic,” Vodafone mentioned in an announcement.

As reported earlier, Vodafone Idea on Tuesday paid round Rs 1,367 crore to the division of telecommunications (DoT) in the direction of its licence price and spectrum utilization cost for the January-March quarter. Operators usually pay their licence price and SUC to the DoT on a quarterly foundation and this fee of the January-March interval was alleged to be paid between March 20-25. While different operators like Bharti Airtel and Reliance Jio had paid on time, Vodafone Idea had sought extra time from the federal government citing the disruption as a consequence of coronavirus pandemic however the authorities didn’t conform to make an exception for a single operator.

Operators pay 8% of their adjusted gross income as licence price whereas SUC ranges between 3-5%. The fee and the dues made by Vodafone Idea on Tuesday is completely different than the certainly one of AGR dues which is at present earlier than the Supreme court docket however nonetheless it has dwindled its decreasing money reserves.

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