Vodafone Idea Ltd (Vi) has amended a long-standing agreement with its promoter, the Vodafone Group, to secure the recovery of approximately ₹5,836 crore, giving the debt-burdened telecom operator a crucial financial lifeline. The revised arrangement was disclosed in a regulatory filing and aims to provide clearer cash-flow visibility for the company.
Under the amended Implementation Agreement, which stems from the Contingent Liability Adjustment Mechanism (CLAM) set up at the time of the 2017 Vodafone–Idea merger, Vodafone Group will provide funds to Vodafone Idea in two parts:
- ₹2,307 crore in cash payable over the next 12 months, and
- 3.28 billion equity shares earmarked for five years, with proceeds from their sale accruing to Vodafone Idea. The market value of the earmarked shares stands at around ₹3,529 crore.
The amended CLAM terms reduce the receivable amount from Vodafone Group to ₹5,836 crore from the earlier receivable figure of ₹6,394 crore after adjusting amounts already received under the original arrangement.
Why This Matters
This payout arrangement provides much-needed support to Vi, which has been under financial stress due to high debt levels, intense price competition in the Indian telecom sector and large statutory liabilities. The infusion of both cash and equity-linked support is expected to help the company manage its near-term obligations and improve liquidity.
Investor reaction was mixed: while the stock did rally on the news of promoter support, ongoing concerns about the company’s broader debt burden and operational challenges continue to influence sentiment.
Background
At the time of the merger between Vodafone India and Idea Cellular in 2017, a CLAM framework was created to protect the combined entity against future legal, regulatory or tax liabilities arising from pre-merger activities. Over time, Vodafone Idea has been seeking to recover amounts due under this mechanism, and the revised terms aim to provide a more structured recovery path.
