In an effort to lower its costs by INR140 billion ($1.97 billion), Vodafone Idea has brought forward its target date for integrating its component firms by two years.
Following the recent completion of Vodafone India and Idea Cellular’s merger to create the new Indian market leader, Vodafone Idea reported a loss of INR49.7 billion for its first quarter as a company, and is pushing to reduce costs and bring in as much as INR250 billion in new capital.
The Economic Times reports that the operator has brought forward the proposed completion date for integrating Vodafone India and Idea Cellular’s operations from fiscal 2023 to fiscal 2021. Vodafone Idea has stated that this will save it INR84 billion, while the consolidation of equipment and spectrum from the two firms’ operations will save a further INR62 billion by reducing costs.
For its fiscal 2019-20, Vodafone Idea will operate on a capex budget of INR270 billion. The operator has a debt burden of INR1.26 trillion, of which over 70% was accrued through acquiring spectrum. To reduce this, Vodafone Idea is planning to sell its 11% stake in Indus Towers, worth around INR50 billion.
Vodafone Idea chairman Kumar Mangalam Birla has asked the country’s finance ministry to extend the operator’s March 2019 deadline to repay INR9 billion ($126 million) in spectrum charges. The Economic Times reports that Birla is seeking to pay back the sum in 12 instalments, as he was worried that the company would fail to meet the March deadline.
The Indian government may relax the payback terms for spectrum fees across the industry, as it is concerned about operators defaulting on payments. The advent of Reliance Jio to the Indian mobile market in 2016 sparked fierce competition that has driven down profitability, and operators have warned the their debt levels are spiralling.