Vodafone Idea on Tuesday paid around Rs 1,367 crore to the department of telecommunications (DoT) towards its licence fee and spectrum usage charge for the January-March quarter. Operators generally pay their licence fee and SUC to the DoT on a quarterly basis and this payment of the January-March period was supposed to be paid between March 20-25. While other operators like Bharti Airtel and Reliance Jio had paid on time, Vodafone Idea had sought more time from the government citing the disruption due to coronavirus pandemic but the government did not agree to make an exception for a single operator.

Operators pay 8% of their adjusted gross revenue as licence fee while SUC ranges between 3-5%.

The current payment and the dues which are before the Supreme Court are different. While for the latter the companies, including Vodafone Idea, have sought the facility to pay in installments spread over some 20 years which is currently before the SC, there’s been no such demand for current payments.

Vodafone Idea posted a net loss of Rs 6,453 crore during the October-December quarter on a revenue of Rs 11,089 crore. Last month, of its Rs 58,254 crore AGR dues, it paid Rs 6,854 crore to the government. This money was drawn on the company’s cash reserves of around Rs 12,815 crore at the end of Q3 and some proceeds remaining of its rights issue. Its cash reserves is now estimated to have come down to below Rs 3,000 crore.

Analysts at Credit Suisse have estimated narrowing of its net loss to Rs 5,816 crore for the January-March quarter. They expect the company’s consolidated revenue to grow by 3.3% QoQ to Rs 11,457 crore and the Ebitda by 11% Q-o-Q to Rs 3,800 crore.

They believe Vodafone Idea will be impacted by COVID-19 with less than expected Arpu recovery following from the tariff hikes announced in December 2019. However, the subscriber market share loss for the company in the near term would be reduced on account of the lockdown. CS is estimating a 2.9% QoQ decline in subscriber base and a 6.5% QoQ growth in the Arpu. The Ebitda will benefit from the improvement in Arpu as 70-80% of the incremental revenue will flow through the Ebitda.

Survival of Vodafone Idea largely depends on whether it is able to get the relief by the SC to pay its AGR dues in installments spread over some 20 years. In that case also it would need to raise funds by its sale of 11% in Indus Towers, which should bring it around Rs 5,000 crore. Some additional funds can be mopped up by monetisation of its fibre assets, but even then it would just about be enough to meet funding till FY22 if Arpu with tariff hikes moves to around Rs 250. Its Arpu in Q3 was Rs 109.