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Funding talks have picked up pace, Vi CEO

Vodafone Idea promoters are ready to put in more equity said chief executive officer Akshaya Moondra, adding that discussions with external investors have picked up pace over the past month after the conversion of equity by the Indian government, with at least three such discussions that were ongoing.

In an analyst call after its Q4FY23 earnings, the top boss of the Aditya Birla Group promoted carrier said that it was working towards closing the funding from external investors, which was held up due to delay in the equity conversion by the government.

“Promoters have contributed equity in the past and they are also ready to contribute some more equity. The third leg of funding has to come from external investors to bring in equity and I would say currently multiple discussions are on and these discussions have become active in the last one month or so after the government (equity) conversion. We are progressing well on these at least three discussions which are going on and we expect to make progress on this and conclude funding,” he said.

The chief executive added that talks also picked up pace after Aditya Birla Group chairman Kumar Mangalam Birla coming back on the carrier’s Board of Directors, and clarified that it was continuously engaged with the department of telecom – which is now the single largest shareholder – and was updating them of all developments including improvements in operational efficiencies and the need for investments in order to get meaningful growth.

The comments come after Mint reported, in separate reports, that the No 3 carrier was working on a revival plan which will be shared with the DoT and that the government was concerned about the delay in promoters putting in additional equity as was committed when the government took up 33% equity in the carrier in lieu of interest on dues of ₹16,000 crore of spectrum payments and AGR payments that were due to the government.

Moondra noted that the launch of 5G services, arrest of customer decline and increase in capex to address capacity constraints will get resolved once external investments into Vodafone Idea come in.

“Our capex in any 5G will be dependent on new funding. The plans that we have shared with the banks and investors include 5G investments and good amount of 5G coverage and we will be executing and implementing that immediately once the funding is in place,” he said.

He also added that the carrier was in ongoing discussions with banks for operational funding which was needed for capex which will be directed towards ramping up 4G coverage that has been stalled since the past 1.5 years, impacting its position among competition.

“We are confident that the investment coming on we’ll be able to make significant improvements,” he said.

On servicing bank loans, Moondra said that Vodafone Idea would be able to pay up ₹8,000 crore of the ₹11,500 crore bank debt in FY24, and the remaining ₹3,500 crore in the consecutive year.

Moondra reiterated the need for tariffs to rise and tariff structures to move towards higher usage meriting higher payments by customers.

Vodafone Idea had also reduced the validity of its lowest plan of ₹99 a month, by lowering the number of days to 15 from 28, thus not needing to increase the charge on its entry level plan in Mumbai – like Airtel did across all its circles to ₹155 – but improving the earning metrics from the same plan. Moondra added that the carrier has removed some loss-making customer cohorts in order to reduce costs of customer acquisition.

Vodafone Idea narrowed losses to ₹6418 crore for the quarter ended March 2023, versus ₹6563 crore in the same quarter last year and compared to ₹7990 crore in the previous quarter. The loss-making carrier improved quarterly revenues and recorded growth in annual revenues for the first time since merger of Vodafone and Idea Cellular in 2018. Annual revenue was up 9.5% to ₹42180 crore from ₹38520 crore in FY22, on the back of tariff hikes, improving subscriber mix and 4G subscriber additions of 4.6 million during the year. Livemint

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