SBI, others to give Rs 14K cr loan to Vi

Proceeds will be used to repay creditors, roll out 5G network and pay for additional spectrum
Vodafone-Idea
Vodafone-Idea File photo

MUMBAI: A consortium of mostly state-run lenders led by State Bank of India has agreed to extend a Rs 14,000 crore credit line to the cash-strapped telecom service provider Vodafone Idea (Vi), which has been trying to turn around its operations through a series of steps, including rolling out 5G services.

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

As per 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 well as to Vodafone Idea, didn’t elicit response but a banking source 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 and to pay for additional spectrum.

Announcing the Rs 18,000 crore follow on public offer (FPO) in April, the management had said its board had approved a Rs 25,000 crore additional fundraising. The FPO was oversubscribed six times and drew global investors such as GQG Partners and Citigroup Global Markets. Vi is a joint venture sewed up between 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 loans, therefore, the FPO was done first. “We’ve been engaging banks for long, and they were asking us to raise equity first, 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 earnings call on May 17. The company has reduced its overall bank debt from 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 Aditya Birla Group entity. This coupled with the preferential equity raise of Rs 494 crore in 2022 from Vodafone Group and the Birlas takes fund infusion by the promoter groups to Rs 7,000 crore between March 2022 and May 2024.

For 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, while revenue rose to Rs 10,606 crore from Rs 10,531 crore. Its ARPU, which provides insights into revenue generated from each user, grew marginally to Rs 146 from Rs 145 in the previous quarter and from Rs 135 in same quarter last fiscal, primarily aided by change in entry-level plan and subscriber upgrades.

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