Vodafone Idea (Vi), the third-largest telecom company in India, expects to get funds from the promoter in the current quarter. The Aditya Birla Group, one of the promoters of Vodafone Idea, reportedly communicated to the company that in case it needs funds, it will invest up to Rs 2000 crore. The telco recently raised Rs 2000 crore from HDFC Bank as well. The fundraising from HDFC Bank helped the telco in clearing its license fees and spectrum usage charges.
The fundraising will definitely help the company to some extent in the short term. But it isn't remotely enough to address the debt concerns in the long term. It is mostly the government debt that the telco needs to sort out. Vi has already been paying the bank debt and clearing it so that none of the financial institutions take the company to the bankruptcy court in case it defaults on payments.
Read More - Vi Gets Rs 2000 Crore from HDFC Bank
Funds are also required for the company to roll out 5G networks. 5G investments would require the telco to increase its capex levels and that won't happen until its cashflow situation improves.
Vendors want what they are owed by Vi. According to a CNBCTV18 report, Vi's debt to vendors has risen to Rs 15,000 crore. The telco was recently threatened by Indus Towers that it would lose access to its towers if the payments were not made in time. Indus Towers has been suffering because its largest customer, Vi has not been making timely payments.
The telco's other promoter, Vodafone UK has already cleared its intent of not helping out the company anymore. Vi's value in the books of Vodafone UK was carried as 'nil'. This suggests that the UK promoter of the Vi doesn't have much confidence in the operations of the telco.