Vodafone Idea will have to pay a fine of 4000 crores, the company failed in minimum 5G rollout

Vodafone Idea, the third largest telecom operator in India, has tested 5G in 26 GHz and 3.3 GHz bands in Pune. According to a tweet by the Maharashtra wing of DoT (Department of Telecom), Vi successfully tested 5G at Ghole Road, Pune.

As per the post, the telecom company did this on August 16, 2023. Note that Vi acquired spectrum for 17 circles during the 5G spectrum auction, but 5G trials have been confirmed for only one circle. This means that the telco has failed to meet the minimum rollout obligation set by the government as per the Notice Inviting Applications (NIA) for the 2022 5G spectrum auction.

Both Bharti Airtel and Reliance Jio have met the minimum 5G rollout obligation and will not have to pay any penalty. But Vodafone Idea will have to do this. This will cause a loss to the company or an increase in its debt. However, there are huge concerns about the company's future at this point in time.

IIFL Securities said that after 2026, once the moratorium period ends, Vodafone Idea will have to pay around Rs 40,000 crore every year to the government as a regulatory payment.

This will make it very difficult for the company to raise any meaningful amount in exchange for equity. If Vodafone Idea is unable to make regular payments, it is likely that a majority stake in the company will be converted into government ownership. The Government of India is already the largest stakeholder in Telecom. But the government no longer wants to be in the telecom business with the state-run telecom operator BSNL.

The Center had already made its position clear by saying that it would not interfere in the activities of Vi's management. The only reason for agreeing to take an equity stake in the company is to help Vi in the short term so that the company can make a comeback in the market.