Vodafone Idea (Vi) has become the hot gossip for the market since the time the company came out with its performance results for FY21. One of the biggest issues that the results reflected was negative cash flow. Vi hasn’t been successful in garnering the interest of institutional investors and hasn’t even been making money. This has put the telco in a very tight situation. But, according to a HindustanTimes report, Vi will be able to close money-raising deals in the next two to 3 months.
Vodafone Idea Will Sell Optic Fibre Infrastructure and Lease it Back
Two people aware of the matter told the publication that Vodafone Idea would be going with a ‘sale and leaseback’ deal. Vi has plans of selling and leasing back its fixed broadband, data centre business, and fibre assets. If you are wondering why the company is selling all of these assets in the first place, it is because it doesn’t have enough cash to keep expanding networks and pay off debts.
But with a sale and leaseback deal, Vi will be able to get the cash, keep its business running, and that will help the company majorly in looking at the future. The telco has a mountain of debt on its shoulders, and the problems just keep on magnifying because of the decaying financials.
The report mentions that this private equity (PE) deal from Vodafone Idea will be closed within 2 to 3 months. Even though the company needs to sell its fibre assets and more, the demand for the internet is going to increase in the coming years. Thus it can be considered a wise decision from Vi to go with a ‘sale and leaseback' deal.
With the cash that comes in through the deal, Vodafone Idea will be able to pay off its upcoming dues to the government. The telco is desperately looking for the sector regulator to come out with floor pricing so that a consistent cash flow can be ensured.