NEW DELHI: Vodafone Idea on Wednesday said its board has approved availing the four-year spectrum payment moratorium being offered by the government as part of its relief package for the telecom sector. The other options offered in the Telecom Department’s notification will be considered by the board of directors within the stipulated timeframe, it said in a regulatory filing. “…we wish to inform you that the Board of Directors of the company has approved the exercise of the option of deferment of the company’s spectrum auction instalments for a period of 4 years (October 2021 to September 2025) in accordance with …the notification dated 14 October 2021 issued by the department of telecommunications (DoT) to the company,” it said. In line with the bold reforms announced recently for the telecom sector, the government last week wrote to telcos including Bharti Airtel, Vodafone Idea and Reliance Jio asking them to convey by October 29 if they would be opting for the four-year dues moratorium. It has also given 90 days time to the operators to indicate if they want to opt for converting the interest amount pertaining to the moratorium period into equity. Along with this option, the audited financial statements of the immediately preceding financial year (2020-21) would have to be submitted, according to the letter sent to the telcos. The government has offered the option to defer payment of the spectrum auction instalments due up to four years, with immediate effect, excluding the instalments due for spectrum auction 2021. This option is applicable from FY 2022-23 to FY 2025-26. These deferred amounts will be spread equally over the remaining instalments to be paid, without any increase in the existing time period specified for making the instalment payments. Interest as stipulated in the relevant year of auction of spectrum will, however, be charged so that the Net Present Value (NPV) of the payable amount is protected. The letters were sent by the department of telecom (DoT) on Friday to the individual operators. “Option for converting the interest amount, arising out of protection of NPV on account of deferred spectrum dues, pertaining to the moratorium period, by way of equity, shall be exercised within 90 days of this notification,” the DoT letter to telcos had said. The letter spelt out the fine print related to the option for moratorium of deferred spectrum auction instalments and AGR related dues, as also the modalities for converting interest amount into equity. The method of arriving at the price and valuation for equity conversion of interest dues is different for listed and unlisted companies. One of the letters issued by DoT to a listed company had mentioned that equity shares would be issued by the company to the government on preferential basis. It went on to add that the NPV of the interest amount will be calculated as on the date of exercise of option. The interest amount will continue to be treated as a loan to companies till the completion of the equity infusion process, DoT had said. The government recently approved a blockbuster relief package for the sector that includes a four-year break for companies from paying statutory dues, permission to share scarce airwaves, change in the definition of revenue on which levies are paid and 100 per cent foreign investment through the automatic route. The measures, aimed at providing relief to companies such as Vodafone Idea that have to pay thousands of crores in unprovisioned past statutory dues, also include the scrapping of Spectrum Usage Charge (SUC) for airwaves acquired in future spectrum auctions. For the past dues, the government has allowed a moratorium or deferment of up to four years in annual payments. But the telecom companies will have to pay interest during the moratorium period. Also, the government will have an option to convert the due amount pertaining to the deferred payment into equity at the end of the moratorium/deferment period. It has also given an option to the telcos to pay the interest amount arising due to the said deferment of payment, by way of equity. Bharti Airtel chairman Sunil Mittal had last month said the company will opt for payment moratorium and redirect the cashflow to aggressively build networks. With regard to interest dues on payment moratorium, Mittal had said Airtel will take a decision, when the offer comes from the government, on whether to go for equity conversion mechanism or pay cash.