In a bid to alleviate its financial struggles, telecom giant Vodafone Idea Ltd (VIL) is reportedly in advanced discussions with three to four private equity funds, aiming to secure approximately Rs 20,000 crore. This development was revealed during a recent meeting between Aditya Birla Group Chairman Kumar Mangalam Birla and senior officials from the Department of Telecommuncations (DoT), said a Business Standard report. While the timeline for the capital raise was not disclosed, the officials expressed confidence in the company's ability to regain stability in the near future.
According to a top DoT official, discussions with private equity investors are ongoing, and VIL is actively seeking the necessary funds. However, there have been no discussions about additional concessions related to the repayment of VIL's dues to the government, such as converting a portion of the dues into equity. The majority of VIL's dues to the DoT are scheduled for payment in the fiscal year 2026.
The reassurance from a prominent telco promoter is significant, as concerns have arisen regarding the potential negative impact on Vodafone Idea due to delays in securing capital. Without adequate funds, the company faces challenges in launching 5G services and expanding its 4G network. While VIL has achieved a network coverage of 90% across the country, its competitors already possess a pan-India presence.
Reports have indicated that private equity funds such as KKR and Temasek Holdings have been engaged in discussions with Vodafone Idea. However, both entities have declined to comment on the matter. Earlier, investors faced obstacles as they were required to wait for the government to convert a portion of its dues into a 33% equity stake in the telco, making it the largest shareholder. This process, completed in February 2023, cleared the path for talks with potential investors. The debt-to-equity conversion helped Vodafone Idea marginally reduce its debt, although it still carries a substantial debt burden of Rs 2.1 lakh crore.