Prospects are bright for a fresh lease of life at Vodafone Idea Limited.

With Kumar Mangalam Birla returning to the board in the capacity of non-independent non-executive additional director, highly placed sources tell businessline that banks have indicated their willingness to increase credit limit to the ailing telecom company.

“Some of the discussions the company has had with banks in the past week seem to be more promising than before,” said a top official who did not wish to be named.

Bankers say with Birla’s return to the board, they are open to increasing their credit limits and/or pursue fresh lending proposals. This ends the nearly four years of hesitation of banks to lend to the telco.

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Bankers’ nudge

Interestingly, it is believed that banks may have played a major role in ensuring Birla’s re-entry into Voda-Idea’s board.

“It came to a point where we (bankers) had to put our foot down to insist that the promoters demonstrate skin in the game,” said a CEO of a private bank. “Just the government bailout or its intention to ensure that telecom will not become a duopoly industry did not give us comfort to increase our exposure to Voda-Idea.”

Additionally, banks have demanded that capital be infused into the company by the promoters.

“If Voda-Idea is looking at $1 billion fund-raise, we’ve told them if half of it has to be infused as debt, an equal share should come from the promoters or third-party investors as equity,” said another CEO of a private bank who didn’t wish to be named.

In September 2021, the promoters of Voda-Idea committed to infusing ₹10,000 crore into the company. So far, ₹4,900 crore of capital has been infused from the proceeds of Indus Towers stake sale.

Earlier, even if the telecom major promised equity infusion, banks were unwilling to budge on the company’s request. Now, with Birla on board, this has changed. An e-mail sent to Voda-Idea and Aditya Birla Group remained unanswered till press time.

On April 21, Voda-Idea announced the return of Birla to the telecom company’s board. Birla earlier was earlier the company’s chairman till he stepped down from the position in August 2021.

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