Info-tech

Vodafone Idea ‘close’ to raising ₹20,000 cr via debt, equity

Ayushi Kar |Thomas K Thomas | | Updated on: May 23, 2022
Ravinder Takkar

Ravinder Takkar | Photo Credit: Gayathri G@Chennai

With most of their conditions met, investors should come in: CEO Takkar

India’s third-largest telecom operator Vodafone Idea will soon get ₹20,000 crore in fresh funding. ₹10,000 crore of this will be equity, and the remaining from fresh bank loans.

As the government’s sweeping telecom reforms settle in, Vodafone Idea CEO, Ravinder Takkar believes that the company is “closer than ever” to raising fresh funds.

In an interaction with BusinessLine, Takkar said, “There was a list of 8-10 things in our investors’ minds, stating that if these criteria are fulfilled, we will put in the funds. We have never been closer to fulfilling this checklist, either it is already done or close to being done. Therefore, I sit in a position of confidence to say we will be able to make the fundraising announcement soon,” Takkar said.

With the Department of Telecommunications returning ₹16,000 crore worth of bank guarantees in April, Takkar notes that the talks with banks have become more favourable, and they are more willing to provide additional loans. Last year, the Vodafone Idea board approved the proposal to raise ₹25,000 crore of funds. Promoters have already infused ₹4,500 crore of fresh equity. “For all practical purposes, the composition of debt and fresh equity will be 50-50 for the remaining ₹20,000 crore,” Takkar explained 

Debt to equity

If a new investor comes in to infuse ₹10,000 crore worth of equity, as per the current market price of Voda Idea shares, it will acquire a 20 per cent stake in the company. Currently, promoters hold approximately a 75 per cent stake in the company, which will get diluted to approximately 50 per cent, once the Indian government formalises its deal with the telco to convert its ₹16,000-crore debt to equity. The infusion of fresh equity into Vodafone Idea will dilute the stake of promoters Aditya Birla Group and Vodafone Plc even further. 

As the company is expecting fresh funds for capital expenditure and its financial position strengthens with the moratorium on AGR and spectrum dues, Takkar told BusinessLine that Vi’s plans to monetise ₹7,600 crore worth of assets are presently on a backburner. In 2021, the company hoped to sell its fixed-line broadband subsidiary along with its data centre businesses and optic fibre unit to pay debt, spectrum and AGR dues. “We currently have funding plans, we have government packages coming out…we don’t see asset sale to be the right thing to do at this point,” Takkar explained. 

Published on May 22, 2022
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