Vodafone Idea close to getting Rs 14,000-crore credit line from SBI, others

The proceeds will be used to repay operational creditors, roll out a 5G network where it has been missing in action for years, and pay for additional spectrum for which the auction is underway now.
Vodafone Idea close to getting Rs 14,000-crore credit line from SBI, others

MUMBAI: A consortium of mostly state-run lenders led by State Bank of India has more or less agreed to extend a Rs 14,000-crore credit line to the cash-strapped mobile phone operator Vodafone Idea, which has been trying to turn around its bleeding operations through a series of steps, including rolling out 5G services.

The debt raising when completed will be part of its overall funding plan of Rs 25,000 crore for capex spending as it looks to come out of heavy losses.

According to a source, the other lenders in the mostly state-run lenders consortium include Central Bank of India, Punjab National Bank, Bank of Baroda and Union Bank of India among others.

Calls to SBI and other lenders as also to Vodafone Idea did not elicit responses but a banking source has confirmed to TNIE that banks have given an in-principle commitment to the company for the Rs 14,000 crore loan which will be disbursed in tranches.

The proceeds will be used to repay operational creditors, roll out a 5G network where it has been missing in action for years, and pay for additional spectrum for which the auction is underway now.

Vodafone Idea close to getting Rs 14,000-crore credit line from SBI, others
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While announcing the Rs 18,000-crore follow on public offer in April, the management had said its board had approved Rs 25,000 crore more fund raising. The FPO was oversubscribed more than six times and drew global investors such as GQG Partners and Citigroup Global Markets.

Vodafone Idea is a joint venture sewed up between the British telecom major Vodafone Group and AV Birla’s Idea Cellular after they found their going tough with the aggressive play that Reliance Jio posed.

Vi chief executive Akshaya Moondra had last month said the banks wanted the company to raise equity first before giving out loans, therefore the FPO was done first.

"We've been engaging banks for a long time, and they were asking us to first raise the equity, so we've done that. Now we’ve resumed our engagement with the banks again…and we hope to close the discussions in good time," Moondra had told analysts during the earnings call on May 17.

The company has reduced its overall bank debt from the peak level of Rs 40,000 crore to around Rs 4,000 crore now.

Early May, shareholders approved an equity infusion of Rs 2,075 crore on a preferential basis, from an Aditya Birla Group entity. This, coupled with the preferential equity raise of Rs 494 crore in 2022 from Vodafone Group and the Birlas, takes the total fund infusion by the promoter groups to Rs 7,000 crore between March 2022 and May 2024.

For the March 2024 quarter, the company reported deeper losses with net loss widening to Rs 7,674 crore up from Rs 6,418.9 crore in the same period the previous fiscal, even though average revenue per user (Arpu) improved to Rs 146, while revenue increased marginally to Rs 10,606 crore from Rs 10,531 crore.

Its average revenue per user, which provides insights into the revenue generated from each user, grew marginally to Rs 146 from Rs 145 in the previous quarter and from Rs 135 in the same quarter last fiscal, primarily aided by change in entry-level plan and subscriber upgrades.

The company has a capex plan of Rs 50,000-55,000 crore over the next three years. The capex will be towards expanding 4G population coverage in 17 priority circles, 5G launch in key cities/geographies and capacity expansion to address the increasing data demand.

It said its 4G subscriber base continued to grow for the 11th successive quarter and stood at 126.3 million as of March from 122.6 million, an addition of 3.7 million over the past one year. The overall subscriber base stood at 212.6 million.

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