Vodafone Idea Limited's (VIL) wholly owned subsidiary Vodafone Idea Telecom Infrastructure is looking to raise about Rs 5,000 crore or Rs 50 billion ($569.5 million) through debt. The company is targetting this fundraise in September, according to a Reuters report. Vodafone Idea Telecom Infrastructure will issue two bonds with a tenure of two and three years, with a target of raising Rs 30 billion and Rs 20 billion, respectively, the report added.
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The coupons offered with these bonds will come with 12% and 14% interest. The company is likely going to tap the private credit funds for this. Vi's debt mountain is already quite large, so whether the company will be able to raise the funds or not is something we will have to wait and see.
The funds raised will go into capex for the company. Vi has been clear about its intentions with the funds raise. The telco wants to use the revenues it generates via business to pay liabilities and debt, but the funds that are raised via equity or debt will go towards capex. Vi needs to improve and upgrade network infrastructure to compete with Airtel and Jio in experience. Due to inferior networks, Vi has been losing out on customers to the competitors.
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The board of the company has already approved the telco to raise about Rs 200 billion via both equity and debt. There's very less likelyhood of Vi raising funds via equity. The only way it can now raise funds is via debt. But even that is not looking easy at the moment as the banks are very much on the backfoot of exposing themeselves even more than this.
Vi has already scaled its capex to new heights in FY25, and in the FY26, the telco only wants to take it a notch higher. But that's only possible if it can raise funds.
