Vodafone Idea to Ask for Fresh Loans from Banks

Vodafone Idea needs funds desperately to pay off dues in the short-term as well as place commercial orders for 5G equipment. The telco will have to launch 5G fast; otherwise, it stands to risk losing the spectrum it bid for in the 2022 auctions.

Highlights

  • Vodafone Idea (Vi), a leading telecom operator, will reportedly approach the banks for fresh loans.
  • The telco is likely going to prioritise servicing old debt in the short term.
  • Banks had earlier said no to Vi for fresh loans by citing the condition that until the time dues to equity conversion for the government takes place, they can't do anything.

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Vodafone Idea

Vodafone Idea (Vi), a leading telecom operator, will reportedly approach the banks for fresh loans. The telco is likely going to prioritise servicing old debt in the short term. Banks had earlier said no to Vi for fresh loans by citing the condition that until the time dues to equity conversion for the government takes place, they can't do anything. Now that the government has finally agreed to go ahead with the conversion, Vi can go to the banks again for asking fresh loans, said a BusinessLine report.




The telco has been struggling to raise funds, both via equity and debt. The impossible situation that the government had created for Vi by delaying the dues to the equity conversion process is now resolved. Vodafone Idea should now focus on raising funds as fast as possible. Several banks already have huge exposure to the telco and would be a little careful about the money they further give the telco.

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Vodafone Idea needs funds desperately to pay off dues in the short-term as well as place commercial orders for 5G equipment. The telco will have to launch 5G fast; otherwise, it stands to risk losing the spectrum it bid for in the 2022 auctions. The government has set minimum requirements for the telcos to comply with for deploying the spectrum purchased in the 2022's 5G auctions.

According to a TNN report, Tuhin Kanta Pandey, secretary of the department of investment and public asset management (DIPAM), said that his department would hold the shares of Vi for the government. Pandey further said that the dues to equity conversion could not take place below par as it would have been a violation of the law.

Post the conversion of about Rs 16,000 crore worth of interest dues into equity; the government would become the single largest stakeholder in Vodafone Idea.

Reported By

Tanuja is a passionate technology and telecom buff who has been following the telecom industry for several years now.

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