Banks have asked for guarantees from promoter group companies and a fresh Techno-Economic Viability (TEV) report outlining Vodafone Idea Ltd’s repayment strategy and earnings potential before considering new lending to the debt-laden telecom operator, according to a Moneycontrol report by Hamsini Karthik and Danish Khan dated May 12, 2026, citing sources.
Vodafone Idea Ltd has been in talks with a consortium led by State Bank of India (SBI) to raise around Rs 25,000 crore in debt, along with Rs 10,000 crore in letter of credit (LC) facilities for procurement of 4G and 5G equipment. The discussions gathered pace after the Department of Telecommunications (DoT) provided relief on the company’s adjusted gross revenue (AGR) dues.
However, during negotiations, SBI conveyed that it does not wish to remain the largest lender in the consortium and has reached out to smaller public sector and private banks to participate in the funding, sources said, according to the report. Smaller lenders, however, are reportedly hesitant to extend loans on the same terms as SBI, particularly on interest rates, as they believe fresh lending may not be viable from an earnings perspective.
“Banks have told Vodafone Idea that they will not provide fresh loans, unless there is guarantee from group companies. There is no communication from VIL on this regard to banks yet,” a banking source was quoted as saying. The source added that lenders are seeking guarantees from group entities or explicit commitments on additional capital infusion from promoters.
Another person familiar with the matter reportedly said discussions are ongoing and no final decision has been made on extending additional credit to the telecom operator.
AGR Relief Boosts Talks
The renewed lender engagement follows the DoT’s revision of Vodafone Idea’s AGR dues to Rs 64,046 crore, down from Rs 87,695 crore earlier, and the deferment of a large portion of payments to FY36–41. The relief package announced on April 30 marked the second major regulatory support measure after an earlier intervention in December.
Also Read: Vodafone Group Weighs Stake Transfer to Support Vodafone Idea’s Fundraising
Vodafone Group Stake Move Speculated
In a separate development, Bloomberg reported that Vodafone Group is considering transferring part of its stake in Vodafone Idea as treasury shares to strengthen the company’s balance sheet and support debt raising. The move could enable monetisation of shares later to meet government dues and fund expansion without fresh cash infusion.
However, Vodafone Idea clarified that it has not received any communication from Vodafone Group regarding the reported proposal, calling it speculative after the report triggered a sharp rally in the company’s stock.
Also Read: Vodafone Idea Clarifies Media Report on Shareholding Transfer Speculation
Last week, Vodafone Idea appointed Kumar Mangalam Birla as non-executive chairman, replacing Ravinder Takkar, who has been redesignated as non-executive vice chairman.
According to the report, sources said Birla’s return as chairman following the AGR relief is aligned with ongoing lender discussions and intended to provide additional comfort to banks.
As of December-end, the government remained Vodafone Idea’s largest shareholder with a 49 percent stake. The Aditya Birla Group held 9.5 percent, while Vodafone Group owned 16.07 percent, according to company filings.
Lenders Wary of High Spectrum Debt
While lenders view the AGR relief positively, they continue to await clarity on potential industry-wide tariff hikes that could further strengthen Vodafone Idea’s financial position.
“A tariff hike of 20–25 percent may still be required for a sustainable industry structure and for Vi to meet its obligations,” the report cited Morgan Stanley as saying in a note.
The report added that despite improved sentiment following the DoT relief, banks remain cautious due to Vodafone Idea’s large spectrum liabilities. As of December-end, spectrum dues stood at around Rs 1.25 lakh crore, with nearly Rs 49,000 crore payable over the next three years.
Funding Gap Still a Key Concern
Vodafone Idea’s bank debt currently stands at about Rs 4,400 crore, including Rs 3,300 crore raised through non-convertible debentures via a subsidiary. Unnamed analysts quoted in the report believe that timely fundraising remains critical to support network expansion, including 4G upgrades and 5G rollout.
According to a May 3 note by BofA Securities, Vodafone Idea may require a capital infusion of USD 6–8 billion (Rs 50,000–66,000 crore), though such a move could lead to significant equity dilution.
If this article saved you time or helped you decide better, consider supporting our work.
Support Telecomtalk
