Vodafone Idea (Vi) and American Tower Corporation (ATC) have agreed to extend the redemption of 1st tranche of OCD (optionally convertible debentures) to 18 months from 6 months. As per the initial agreement, the first tranche of the OCD was supposed to be redeemed on a six-month deadline on August 28, 2023. But that has been extended to 18 months, per the agreement of both companies, said Vi in an exchange filing on Monday morning.
The telco issued OCDs worth Rs 1600 crore to the ATC as it was finding it hard to pay back its dues. The OCDs are supposed to be executed in two tranches of Rs 800 crore each.
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Vodafone Idea's stock price has zoomed in the last couple of days due to talks about possible fundraising soon. There were reports that Vi is talking to potential investors and already has terms sheets from some of them. Due to that, Vi's stock gained a lot of momentum and is now trading at a much better value.
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However, hopefully, the telco will be able to secure a significant amount of money through the fundraising. Any amount that doesn't help the business both increase capex and pay off debt is insignificant. Vi needs to invest more in its networks so that it can retain existing customers and also acquire new ones.
The telco will have annual statutory payments of about Rs 40000 crore starting FY26 when the moratorium period ends. Thus, Vi has to raise a significant amount of funds to boost revenues. The telco is also in need of an ARPU (average revenue per user) boost, but that won't happen until and unless a tariff hike kicks in.
Also, apart from ATC, Vi has dues to pay to other vendors including Indus Towers, Ericsson, Nokia, and more.
