Vi Readies to Raise Rs 35,000 Crore in Debt over a 10 Year Period

Vodafone Idea Limited (VIL), the third largest telecom operator in India, has plans to raise about Rs 35,000 crore in debt in the near future. The debt will come from a consortium of eight to ten banks. Reportedly, thsi consortium will be led by the State-Bank of India (SBI). The government run bank is supposedly going to take an exposure of about 20%, which translates to approximately Rs 7,000 crore. Vi has managed to reduce the bank loans super fast. However, things are not going to be as easy to raise these funds. While SBI is ready to take this exposure, Vi  has to convince other banks to join as well.

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The other banks will have to go for at least Rs 1,500 crore in exposure, if they decide to come onboard, said an ET report.

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Vi Needs to Rs 60,000 Crore to Upgrade Services

Vodafone Idea will require about Rs 60,000 crore to upgrade services across the country, as per an assessment by the State Bank of India. While the Rs 35,000 crore will come from the banks, the rest of it will have to come in other forms including equity infusion. There are terms and conditions set by the bank for providing this loan.

One of the terms is that in case things go wrong, the Aditya Birla Group (ABG) will not sell its stake and leave the company’s fates to other promoters hands. ABG is the third largest promoter in the company, owning 6.64% stake in the telco. The Vodafone Group UK has 19% stake in the company, and the Indian government has the highest stake of about 49%. Last time, when there were problems, and Vi’s statutory dues were going up without any reflief in sight, Kumar Mangalam Birla, had stepped off the board as chairman of Vi and now only returned when things started to improve.