Contingency Mechanism: Vodafone Idea gets Rs 1,530 crore from Vodafone Plc

Vodafone Plc on Wednesday said it has accelerated a payment of $200 million (about Rs 1,530 crore) to Vodafone Idea, due in September 2020, under the terms of the ‘contingent liability mechanism’. This is not any fresh equity infusion in the company but part of contingent liability mechanism entered between Vodafone and Idea Cellular at the time of merger, wherein Vodafone Group needed to pay for adjusted gross revenue dues if the amount paid exceeded that of Idea Cellular.

Vodafone Group said that following the decision of Supreme Court on the definition of adjusted gross revenue (AGR) in October 2019, India’s telecom operators became liable for licence fees, penalties and interest dating back over 14 years. “Vodafone Idea has made payments to the government of India in relation to its AGR liabilities. Under the terms of CLM, Vodafone Group is obliged to make payments to Vodafone Idea where amounts paid pursuant to the contingent liabilities of Vodafone Idea exceeded those of Idea Cellular. The CLM took effect at completion of the merger of Vodafone India and Idea cellular in August, 2018,” the company said.