The sale of Rs 1,600 crore worth of convertible bonds to ATC Telecom Infrastructure was approved by the board of Vodafone Idea Ltd. on Friday. Vodafone Idea would use the money to settle some of the outstanding debts it has with the tower operator since it rented out its equipment to offer mobile phone services in India.
Information Regarding the Fundraising
Vodafone Idea owes close to Rs 3,000 crore to ATC and an additional Rs 7,000 crore to Indus Towers, the largest tower provider in the world. Vodafone Idea stated, “The funds raised will be used to pay amounts owed to ATC under the master lease agreements and for general corporate purposes,”
The telco said that it would issue Rs 16,000 optionally convertible, unsecured, unrated, and unlisted debentures of Rs 10 lakh each in one or more tranches. The bonds will have an 18-month term with a semi-annual coupon payment of 11.2% and be convertible into shares at a price of 10 per share. Additionally, it stated that there would be a number of requirements for the preferential selling of the debentures, including shareholder approval and the government converting interest on the deferral of the company's spectrum dues and adjusted gross revenue into equity.
The decision to pay ATC would give breathing room to the loss-making telecom service provider, which has debts totalling more than Rs 1.9 trillion and is unable to raise Rs 20,000 crore through equity or debt from outside investors.
In order to compete in the Indian market, where rivals like Bharti Airtel and Reliance Jio have laid out aggressive plans for deploying 5G services, Vodafone Idea, which serves more than 260 million mobile phone consumers, needs money.
Akshaya Moondra, the CEO of Vodafone Idea, stated during the company's 27th annual general meeting last month that negotiations were ongoing with a number of vendors for the purchase of 5G (equipment) as well as with banks for financing plans. He stated that once these two elements have been in place, 5G deployment will begin.