Troubled Indian telecom company Vodafone Idea is looking at various options to raise funds. The company is reportedly looking at converting interest dues arising from the deferment of statutory payments into equity, the Press Trust of India reported.
Vodafone Idea is also in talks with banks and investors about raising funds and part of the proceeds are likely to go towards meeting its obligations related to debt maturing this fiscal year. Company CEO Ravinder Takkar said they expect to conclude the fundraising plan by the end of the current financial year.
Last September, the company’s board approved a plan to raise up to 250 billion rupees (US$3.36 billion), but failed to attract investors.
The Vodafone Idea CEO welcomed the government reform package announced in September and termed it a significant positive development. “We believe there will be renewed interest from investors. We are also in the process of updating our business plan. Once it is finalized we will make suitable disclosures on fundraising. We expect to conclude this exercise during this fiscal year,” he said.
There were reports that Vodafone Idea had approached India’s biggest lender, the State Bank of India, for a loan. However, the company issued a clarification denying the reports.
In September, the government introduced a relief package for the telecom sector. It offered the option of deferring all their dues payments for spectrum and Adjusted Gross Revenue (AGR) by four years to provide debt-ridden telecom companies with an opportunity to improve their cash flows.
Vodafone Idea recently reported a consolidated loss of 71.44 billion rupees in the September quarter, as against 72.18 billion rupees in the same period last year. The company managed to trim its costs on account of an increase in mobile services tariffs and cost optimization.
The company’s debt is a matter of concern. Its total gross debt as of September 30, 2021, stood at 1.94 trillion rupees. It comprised deferred spectrum payment obligations of 1.08 trillion rupees ($14.52 billion), and adjusted gross revenue liability of 634 billion rupees that are due to the government. Vodafone Idea also owes 227 billion rupees to banks and financial institutions.
Compared with rivals Reliance Jio and Bharti Airtel, Vodafone Idea is financially weak and market analysts worry about its future. Brokerage firm Credit Suisse said Vodafone Idea would need at least $1 billion within the next six-nine months to repay its non-spectrum debt and compete with rivals, the Economic Times reported.