Vodafone Idea (Vi) has been under heavy financial distress for a long period. However, the telecom giant has committed to its lenders that it will go ahead with the delayed fundraising amounting to nearly $1 billion (Rs 7,500 crore) by June 2021. The officials aware of the matter said that Vodafone Idea will not default on any upcoming payments. As reported by ET Telecom, one of the domestic lenders of Vodafone Idea, which is a private sector bank, has promised a bank guarantee to the telco of about Rs 1,420 crore by another year. The telco will use the bank guarantee to clear the left-out dues to the government for the 4G spectrum. Vodafone Idea purchased 4G airwaves worth Rs 1,993.4 crore and nearly paid Rs 574.65 crore at the time of acquisition.
Fundraising has been Challenging for Vodafone Idea (Vi)
As stated by industry experts, fundraising has been challenging for Vodafone Idea (Vi) because of weak financial results and losing customer base. There are multiple concerns that have surfaced for cash-strapped Vodafone Idea’s 25,000 crore fundraising project. The telecom giant has failed to secure deals with potential investors such as Norway’s Government Pension Fund Global, Oak-Hill led consortium, UK based private equity firms KKR, besides Canada Pension Plan Investment Board even after having intensive talks and discussions.
All the potential investors want the co-promoters of the telco, which are the UK’s Vodafone Plc and the Aditya Birla Group, to infuse capital in the entity. However, both the co-promoters have refused to dilute additional capital in the loss-making telco. Even though the telco is facing hardships in the fundraising project, a top executive of a bank that advanced a sizeable loan to Vodafone Idea said that the telco has assured to raise some funds by the end of June 2021.
Vodafone Idea’s Local Lenders are Keen to Provide Telco Additional Time Period
The list of local lenders of Vodafone Idea (Vi) includes renowned entities such as Punjab National Bank, IndusInd Bank, State Bank of India, YES Bank, ICICI Bank, IDFC Bank and HDFC Bank. The local lenders are not worried as the telco has paid loan and interest payouts in time. Also, the local lenders are keen to provide an additional period to Vodafone Idea because it has time till FY23 before it begins paying annual spectrum-related payments.
Vodafone Idea has nearly Rs 50,400 crores of AGR dues payable to the government, and its annual spectrum payment instalments of about Rs 15,500 crore will begin from FY23. The telco released information regarding the third-quarter earnings and revealed that loans falling due beyond 12 months were Rs 8,691.9 crores as of December 31, 2020. Also, the bank guarantees amount to Rs 11,371.6 crore are due to expire in the next 12 months.