Promoters of Vodafone Idea may infuse Rs 10,000 crore: Report

Vodafone Idea has been trying to raise Rs 25,000 crore over the last year but has not been successful so far. Post announcement of the relief package from the government, the company is hopeful of raising fresh funds.

Vodafone Idea’s promoters — UK’s Vodafone Plc and the Aditya Birla Group (ABG) may infuse about Rs 10,000 crore into the telecom company, Financial Express reported Tuesday quoting officials from the Department of Telecommunications (DoT).

Vodafone Idea has been trying to raise Rs 25,000 crore over the last year but has not been successful so far. Post announcement of the relief package from the government, the company is hopeful of raising fresh funds.

In the past, both the promoters have said they won’t put any fresh funds in the company. Vi has been struggling to survive in a hyper-competitive market and losing subscribers constantly.

Vodafone Plc holds a 44.39 % stake in Vi while Aditya Birla Group holds a 27.66% stake.

On September 15, the Cabinet had cleared a relief package for the telecom sector which includes rationalization of AGR definition to exclude non-telecom revenue, 100% Foreign Direct Investment (FDI) through automatic route, an option to avail of a four-year moratorium on AGR and spectrum dues but with the net present value (interest) protected, among other measures.

The interest which will be calculated as ‘MCLR+2%’ can be paid to the government by way of equity. The DoT officials told the publication guidelines for the same will be announced soon.

In an interview to ET recently, Vodafone Idea MD Ravinder Takkar said, “Government’s announcements have been game changing in the area of fundraising. We talked to investors and the concerns that they brought up have been addressed. We are waiting for full clarity on the package. The Cabinet has announced its decisions and it gets converted into specific guidelines, they should be coming in a few days. That will allow us to kickstart the fundraising process all over again. We expect a fairly quick turnaround time given the fact that the issues that the investors were bringing up have been addressed”.

No doubt Vodafone Idea will survive, be competitive in market, funding to come soon: TakkarTakkar says telco open to converting interest on deferred dues to govt equity.

As per Takkar, Vodafone and ABG have invested more than Rs 1,90,000 crore into Vodafone Idea in the last 10 years.

Market experts have predicted that the government may end up owning a “sizeable” portion (from 26% to a majority stake) in Vodafone Idea at the end of the moratorium period if the telco opts to pay cumulative interest or annual installments by way of equity.

Jefferies had said the moratorium would provide cashflow relief to the telco and “could lead to the government taking up sizable stake in VIL”. It had projected that the government could own 26% stake in Vodafone Idea at the end of four years if the telco chooses to pay the total interest of Rs 9,000 crore through equity.

However, discarding these concerns, Takkar had said, “… the government has no interest in owning any additional telecom companies in the country. They have no intent of running any other company. They have said it very clearly to us that you guys are the experts at running this, they want us to run and we are competitive in the market and provide support to customers”.

The financially struggling telco had a total gross debt of 1.91 lakh crore, as of June 30, 2021. It comprises a deferred spectrum payment of Rs 1.06 lakh crore and AGR liabilities of Rs 62,180 crore. It owes Rs 23,400 crore to banks as debt.

Vodafone Idea to approach board for fundraising after govt issues guidelines on reform measures: CEOVodafone Idea board had earlier approved a fundraise of up to Rs 25,000 crore but it has been unable to finalise any investor as of now.

https://telecom.economictimes.indiatimes.com/amp/news/promoters-of-vodafone-idea-may-infuse-rs-10000-crore-report/86578178