Vi Needs Promoter Funding To Get External Investors; Promoters Are Not Willing To Infuse More

Vodafone Idea Needs Promoter Funding To Get External Investors; Promoters Are Not Willing To Infuse More

January 6, 2023: New Delhi: The government is finding it difficult to convert interest accrued on debt-laden telco Vodafone Idea’s deferred adjusted gross revenue (AGR) dues into equity without any cash infusion by the promoters.

Vi promoters — UK’s Vodafone Plc and the Aditya Birla Group — are not willing to put in huge sums and have raised Rs. 2,000 to Rs. 3,000 crore has shown willingness to put in a small amount.

The amount that the promoters are willing to pay is very low and not enough to revive Vi, which is worth around Rs. 40,000 to Rs. 45,000 crore is required.

“Vodafone Idea (Vi) needs around Rs 40,000-45,000 crore to sustain itself. Assuming banks fund half of it, the promoters will have to put up the rest. In the absence of promoter funding, it will be difficult for the company to raise external investors. ,” a senior government official told The Economic Times.

Pending conversion of Vi into equity

Without a promoter infusion, banks are also unlikely to support Vi, which has been discussing a cash infusion with external investors for several months.

Meanwhile, talks between the two have stalled as investors want the government to own a stake in the company.

In September last year, accrued interest on delayed AGR-related dues of Rs. The proposal to convert the value of 16,130 crore into equity was approved by the Finance Ministry.

Once completed, the government will become the single largest shareholder and own around 33 percent of Vodafone Idea’s equity.

The equity conversion is important for Vodafone Idea, which raised Rs. 18,799 crore worth of airwaves, so potential investors are seeking clarification on the issue.

190 crore at the end of September with the telco having a total cash balance of around Rs. 2.2 lakh-crore had a net debt.

While he has to pay banks and other lenders Rs. 15,080 crore in debt, while Vi’s trade payables, reflecting dues from vendors such as tower companies and suppliers, stood at Rs. 15,030 crores.

Vi urgently needs money to pay off its dues to major vendors like Indus Towers, ATC, Nokia and Ericsson and banks, and to launch 5G services and expand 4G coverage.

Cash-strapped telecom giants Reliance Jio and Bharti Airtel are losing customers. The latest data from Trai showed that the subscribers added by both telcos in October helped reduce the user base of Vodafone Idea, which lost around 3.5 lakh mobile subscribers in October.

Vodafone Idea Revival

Vi promoters have infused the cash-strapped company with around Rs. 10,000 crores was assured to be invested.

However, from January 2022, Telecom will receive Rs. More than 4,900 crores have been received. A large part of this amount was used to pay some dues of tower company Indus Towers.

“Practically none of these were used by Vodafone Idea,” the senior official added.

Another official told ET that the government cannot take on the responsibility of a telco when the promoters themselves are not willing to back it with a significant fund infusion.

Vi recently acquired India’s largest public lender State Bank of India (SBI) for Rs. 15,000-16,000 crore loan, however, the latter has sought clarification on its business scale-up plans, including the government’s possible shareholding in Vi and promoter infusion.

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