Vodafone Idea (Vi), a struggling Indian telecom operator, has lost the confidence of its lenders. The telco, unable to raise funds, will not be able to raise fresh capital from lenders now. This is because it missed the deadline of raising funds by December 31, 2023, and since the promoters are not showing any confidence in the company, the lenders don't want to expose themselves any further. While Vi is paying off bank dues fast, the overall dues are still a negative point for investors who want to invest in the company. Losing subscriber market share every quarter is further a bad sign for investors.
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Vi's management has maintained that they are in talks with potential investors to raise fresh funds via debt and equity before the end of 2023. However, that didn't materialise and the telco's plans to raise funds again got delayed. According to a BusinessLine report, lenders are refusing to extend fresh loans to Vodafone Idea. Lenders don't feel that the financials and the business operation of Vodafone Idea are sustainable for the long term.
Much recently, Vi has clarified SEBI over the online report that suggested the telco is in talks with Elon Musk's Starlink for a potential stake sale. Vi said that no such talks have taken place. Before the clarification from the telecom operator came, its stock had zoomed to Rs 17.80 on Tuesday. At the closing bell on Tuesday, after the arrival of the clarification, the telco's stock had fallen to Rs 16.05. That's still over 100% growth YoY for the stockholders of Vi.
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Things won't get better for Vi if the telco can't manage fundraising in the near future. The telecom operator is struggling to place orders for 5G equipment and launch commercial 5G network services due to cashflow issues. Despite a rise in revenues, the telco's losses don't seem to come down.
