Lenders Of Vodafone Idea To Swap Debt for Equity

Vodafone Idea Limited (Vi) lenders are eying to swap their debt for equity, thereby resulting in significant dilution of the company’s promotors - Aditya Birla Group (ABG) and Vodafone Group Plc. Also, bth promoters have agreed to dilute their shareholding in the company.

Highlights

  • Vodafone Idea Limited (Vi) lenders are eying to swap their debt for equity, thereby resulting in significant dilution of the company’s promotors.
  • ABG holds a 27.66 per cent stake in Vi while Vodafone holds a 44.39 per cent stake.
  • On Thursday, the shares of the telco hit another 52-week low though it recovered in the day ending at Re 5.94, which is 1.49 per cent low on the BSE.

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Vodafone Idea

Vodafone Idea Limited (Vi), the debt-laden telco is hitting the headlines almost every other day. The lenders are eying to swap their debt for equity, thereby resulting in significant dilution of the company’s promotors - Aditya Birla Group (ABG) and Vodafone Group Plc, reports the Business Standard.

The report citing a banking source noted that both promotors have agreed to dilute their shares in the company. Notably, ABG holds a 27.66% stake in Vi while Vodafone holds a 44.39 per cent stake.

Vodafone Idea Makes Loss

The telco merger of ABG’s Idea Cellular and the Indian unit of the UK’s Vodafone Group was formed in August 2018. Now, it is eyeing a shortfall of Rs 23,500 or $3.1 billion in cash flows in the financial year 2022-23. In March-end, the company had a cash balance of Rs 250 crore. Also, it is on the attempt of raising Rs 25,000 crore over the past ten months though it was not successful.

On Thursday, the shares of the telco hit another 52-week low though it recovered in the day ending at Rs 5.94, which is a 1.49 % low on the BSE.

Kumar Mangalam Birla Resigns From Vi

In the meantime, Kumar Mangalam Birla wrote that he will hand over the group’s stake in Vi to any domestic financial or public sector institution that can keep the company afloat. He wrote to the government highlighting that telco needs immediate government support without which it might be driven to a “point of irretrievable collapse”.

As of now, the government has not responded to his letter dated early June and he resigned from the position of non-executive chairman and director of Vi a few days back. Himanshu Kapania, the former MD of erstwhile Idea Cellular has replaced him now.

Government Relief Package for Telcos

Meanwhile, the government is working on a relief package aimed at the telcos, which might also benefit Vodafone Idea. This package might include reduction of bank guarantees, surrender of the spectrum, reducing levies such as spectrum usage charges and license fees. Also, it will redefine AGR to exclusive non-telecom aspects.

Also, Ravinder Takkar, the Vi MD sent an internal communication to its 9,500 employees, assuring that ABG and Birla will provide support to the telco.

Reported By

Managing Editor

Chakri is a go-to guy for your next smartphone recommendation. Back in his engineering days, he used to play with smartphones by installing custom ROMs and that passion got him into the tech industry. He still goes nuts about a smartphone knocking his door for review. Currently managing everything at Telecom Talk, Chakri is trying to master PUBG Mobile in his free time.

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