Vodafone Idea Promoters Hesitant to Infuse Required Capital

Vodafone Idea (Vi) has been struggling to make ends meet because of cash stress on the business. The move to convert interest dues into equity for the government isn’t going ahead. The government wants the promoters to infuse a significant amount of capital before it can jump to take a stake in the cash-strapped telco. An ET Now report suggests that the promoters are willing to infuse capital into the company. However, the amount that the promoters want to invest isn’t significant. Vi has two promoters – Aditya Birla Group (ABG) and Vodafone Group Plc. The promoters have signalled that they can invest additional capital to the tune of Rs 2,000 to Rs 3,000 crore. However, looking at the debt situation that Vi is in right now, this amount feels like a drop in the ocean.

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Vodafone Idea’s Debt Mountain is Too Big

Read More – Vodafone Idea: 2023 Will Be the Year of Make or Break for the Telco

For the unaware, at the September end, Vodafone Idea had a net debt of Rs 2.2 lakh crore, and its gross cash balance was just Rs 190 crore. A senior government official told ET that Vi needs somewhere around Rs 40,000- Rs 45,000 crore for sustaining, and even if the banks/financial institutions pitch in to cover half of the said amount, promoters need to cover the rest. The official said that in the absence of promoter funding, it would be difficult for the company to get external investors onboard.