The troubled telco in India - Vodafone Idea is in talks with the State Bank of India seeking fresh loans. It intends to strike a deal that could pave the way for other banks to boost the cash-strapped wireless operator’s survival chances by offering credit. Vodafone Idea was requested by the State Bank of India to outline a turnaround strategy. This development comes as there seems to be no respite to the joint venture between Vodafone and the conglomerate from Kumar Mangalam Birla.
The government lender has asked Vodafone Idea to give a detailed plan regarding its financial viability such as equity infusion from major shareholders, tariff outlook, cash conservation plans, and a roadmap to go to profitability.
Vodafone Idea Seeks Fresh Funds
The telecom operator is prepping these details for the lender and discussions are underway. As of now, there is no assurance that the telco will receive the funds. For now, the State Bank of India did not comment anything on this, said the Bloomberg report. Also, Vodafone Idea, which reported its quarterly earnings today did not comment on the matter.
If it materialises, the bank loan will be a lifeline for the merged company. Notably, it did not report any annual profit since the advent of Reliance Jio’s services in 2016 and started losing subscribers to its rivals. Banks are now more amenable towards the wireless operator that has failed to show a profit after the government announced the telecom relief package in September, which helped the company avert an insolvency threat.
Being the third-largest wireless operator in the country, Vodafone Idea survived from being nearly bankrupt after the government lets more time to mobile phone companies to pay their pending dues. This way, the lenders will get more elbow room to extend their credits given to Vodafone Idea, said one of the sources.
The total debt of Vodafone Idea, which was Rs 1.9 trillion as of June 2021. This included Rs 1.68 trillion it owed to the government and the other Rs 234 billion was meant for lenders. These figures were revealed by KM Financial, a brokerage’s note on September 15.