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Vi proposes Rs 23,000cr in term loans and Rs 10,000cr BG

Vodafone Idea has proposed to borrow Rs 23,000 crore in term loans and sought an additional Rs 10,000 crore in bank guarantees. The telco has submitted the term loan proposal at a meeting of a State Bank of India (SBI)-led banking consortium a few days ago.

The targeted Rs 55,000-crore CapEx spending over the next three years is toward 4G expansion and 5G rollouts.

Both Reliance Jio and Bharti Airtel have already deployed pan-India 5G networks.

Vi is considering rolling out 5G on a large scale over six months. The company plans to invest Rs 50,000-55,000 crore over the next three years. Vi also emphasised that while 5G rollout was important, the telecom’s ‘topmost priority’ was to expand and strengthen 4G coverage.

Vi’s joint venture between Vodafone Plc and Aditya Birla Group submitted its loan proposal to a State Bank of India (SBI)-led banking consortium a few days back. The funds will go towards upgrading mobile broadband network infrastructure across its 17 priority markets.

Vi’s approach to banks follows its recent arrangement of around Rs 24,000 crore in equity capital, fulfilling a key condition set by lenders for extending fresh loans. Over the past few months, Vi has been negotiating with banks to raise up to Rs 25,000 crore via debt and an additional Rs 10,000 crore in non-fund-based facilities such as bank guarantees.

J P Morgan, after meeting Vi’s CFO Murthy GVAS, noted that some of the targeted $6.6 billion capex will be front-loaded to quickly bridge the gap with competitors.

The banks will also seek a techno-economic viability (TEV) report from a top consultancy firm to evaluate Vi’s creditworthiness before deciding on the loan sanction.

The news report also noted that some banks remain cautious about increasing their exposure to Vi due to its substantial pending government dues and the highly competitive telecom sector.

As of March 2024, Vodafone Idea has paid Rs 7,854 crore out of its total adjusted gross revenue dues of Rs 58,254 crore, as per the Supreme Court’s 2019 order. Business Standard

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