Struggling telecom operator Vodafone Idea will continue extensive fundraising talks with foreign lenders’ consortium till February 28. The consortium is led by Oak Hill Advisors and the telco is looking to raise $2 billion via credit line. The earlier deadline for the fundraising talks was January 31, however, it has now been extended till the end of this month. This news is reported by ET Telecom citing three people aware of the matter. The deadline extension happened because the lenders are looking for some 'safeguards and business milestones' to protect their investments. This makes complete sense as Vodafone Idea lost more than 100 million subscribers in less than two years and it is increasingly becoming a worry for the telco as well.
Vi Looking to Raise $2 Billion via Credit Line
It is reported that the lenders were looking to close the deal, but they were looking for some safeguards and business milestones to proceed with the funding. Vodafone Idea continues to lose subscribers, as a result, the telco' subscriber base was down to 295 million at the end of November 2020. Vi is looking to raise Rs 14,600 crore or $2 billion through equity funding and the US-based firm Oak Hill is leading the consortium. The consortium also includes GoldenTree Asset Management, Pacific Investment Management Co, Sixth Street, Twin Point Capital and Varde Partners.
"An investment banker, who works closely with the telco, said raising debt would be a more realistic option for Vi in the near term as equity financing would hinge on fresh capital infusion by its co-promoters, Vodafone Group Plc and the Aditya Birla Group," the ET Telecom report added.
To attract equity funding, a company should have improved balance sheet and competitive position as the key factors. The best approach for Vodafone Idea to raise funds will be the combination of debt and equity. Still, the banker believes Vi should tap equity markets once profitability returns and focus on debt-raising that could happen immediately.
