NEW DELHI: Even as Vodafone-Idea (Vi) remains clueless about the government’s stance on converting its dues into equity, sources in the government say the telecom operator must try to get investors and raise fresh capital to survive in the market instead of waiting for the government to pick up stake in the company.
A government official told this newspaper fresh investment by Vi will show they want to remain in the Indian market and that would make the government consider holding a stake in the telco.“The equity conversation will not give Vi any major relief from the dues, which the company has to pay anyway,” the official said. The official further added that the need of the hour for Vi is large investments by its promoters. If one partner (primarily referring to Vodafone) is not interested in running its business in India then they should pass their stake to the other partner (referring to billionaire Kumar Mangalam Birla, added the official.
India’s third-largest telco Vodafone Idea has been trying hard to onboard investors since 2022, but failed to get any. It could only raise Rs 4,500 crore from its promoters Aditya Birla Group and Vodafone Group. However, its chief executive officer Akshaya Moondra reportedly said it is in advanced talks with investors to raise fresh capital to upgrade its 4G service and roll out 5G.
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Currently, the company’s net debt (excluding lease liabilities) is Rs 2.2 lakh crore as of September 30, 2022. It owes Rs 12,000 crore to vendors like Indus Tower, ATC, Nokia, etc. Meanwhile, Vi on Tuesday said its proposal to issue Rs 1,600 crore debentures to mobile tower vendor ATC Telecom Infrastructure has lapsed in absence of any response from the government on the conversion of interest dues into equity.
“As the company has not received any communication from the Government of India on such conversion, the issuance of optionally convertible debentures (OCDs) to ATC has not been completed, within the validity period of the shareholders resolution,” said the company in an exchange filing. VIL had opted for converting government dues into equity, after which the government will hold nearly 33% in the company.