Vodafone Idea’s (Vi) financial stress, underlined by mounting losses and rising debt, was likely to impact its financial lenders and have a bearing on employees and subscribers, ICRA said on Monday, highlighting that government support was “critical” at this point. 

The support can be by way of deferment of spectrum dues, cut in levies, reduction in interest rates and a combination of relief measures than can aid financial profile and the structure of the industry. 

“Vodafone Idea has been under financial stress as reflected by mounting losses and burgeoning debt levels, which is likely to impact its financial lenders as well as government, apart from having a bearing on its employees, its subscribers and associated industries, most prominently towers,” ICRA said in a statement. 

In the event of Vi’s exit, the tower industry may be confronted with vacation of around 1,80,000 tenancies that the telco currently occupies. Of these, only 40-50 per cent of the tenancies were expected to be regained by the tower companies over 18-24 months, the rating agency said. 

“The telecom industry had been facing headwinds since the launch of services by Reliance Jio Infocomm which manifested into decline in revenue and profit generation,” ICRA said, noting that Adjusted Gross Revenue (AGR) dues had added to the industry’s woes. 

Given the precarious position of Vi’s balance-sheet, material external support (primarily government) “might be necessary”, it said. 

ICRA said that Vi owed Rs 23,400 crore to lenders and Rs 1,68,190 crore to government towards spectrum and AGR deferred dues as on June 30, 2021.