Vodafone Idea (Vi), the third-largest telecom operator in India, is reportedly looking to raise up to Rs 16,000 crore from the State Bank of India (SBI). This will be a Rs 16,000 crore loan, but the talks between both companies are at a very nascent stage as of now. SBI has asked Vodafone Idea for clarification on when the government will convert its dues into equity in the company, along with some other business plans. Vi is the only private telecom operator that hasn't been able to launch 5G yet. This is because the telco is facing financial problems, and 5G is going to be super capex intensive. This fundraising via a loan from SBI would enable the telco to roll out 5G as well as pay off vendor dues, said an ET report.
Vodafone Idea Stuck Because of Govt Not Moving Ahead with Equity Conversion
Vodafone Idea is stuck because the government is not moving ahead with the equity conversion against the accrued interest dues on adjusted gross revenue (AGR) related dues. Vi has been not been able to raise funds because of this. The investors who want to give Vi their money can't do it until and unless they get some clarity on the government's role in the company.
A few weeks back, Vi's management had said that they had not received any sort of communication from the government over why the equity conversion process is stuck. The telco is now looking at SBI to get financial help. Earlier this year, Vodafone Idea had prepaid Rs 2700 crore to the SBI to win some confidence of the financial institutions.
No one can say right now whether the talks between both companies would result in successful fundraising for Vi. The telco desperately needs money to fuel its 4G capex and roll out 5G, which it has been preparing for years.