Vodafone Idea’s plans to raise external funds of over ₹20,000 crore may get further delayed and are unlikely to culminate even in the quarter ending March 2024, said two people aware of the development.
While the telecom service provider has been in talks with investors, including those from the US, the massive debt liability of over ₹2 trillion, besides limited amount of capital coming in from promoters, is being viewed as factors leading to the delay, one of the people said on the condition that he not be named.
“It will take time. The expectation was that funding would come in by the year end, but that is not happening. Whether it will happen in the next quarter is also uncertain,” the second person said, asking not to be named.
One of Vodafone Idea’s promoters was supposed to provide ₹2,000 crore financial support to the carrier, in case it was required to pay up the annual instalment of spectrum charge that fell due on 17 August, 2023. While this was not needed, as the company was able to make the payment by raising fresh debt from banks, the promoters have since not pitched in with fresh capital. A Vodafone Idea’s spokesperson said, “Discussions on funding are underway. As a listed company, we shall make disclosures at the appropriate time.” The company did not elaborate on the timing of the fund-raise or the avenues that it was exploring to raise capital, much needed to start 5G services.
Vodafone Idea chief executive officer Akshaya Moondra said in the earnings call in October that promoters’ commitment to put in an additional ₹2,000 crore stood as is, and would come in alongside investments from external investors. He also said that the company was in discussions with three parties for external investment, which was expected by the year-end.
The telecom carrier is evaluating sale of its fibre assets and in-building solutions to raise ₹10,000-12,000 crore. The UK’s Vodafone Group, a shareholder in Vodafone Idea, holds stake in Indus Towers, which was being evaluated for sale to pare the Indian carrier’s debt, which stood at ₹2.127 trillion as of September end. However, debt from banks and financial institutions has reduced by ₹ 7,220 crore as of September. In September 2022, the company owed these institutions ₹15,080 crore.
Vodafone Idea is the country’s third-largest telecom services provider.
It has been making losses for several years. It owes majority of the debt to the government in spectrum fees and payment dues of spectrum bought in the previous auctions. Its losses widened to ₹8,737 crore for the quarter ended September 2023, from ₹7,595 crore in the same quarter a year before, owing to high interest and finance costs despite an increase in revenue and a higher number of 4G subscribers.
The company’s inability to raise funds since 2020 has prevented it from commercially launching 5G service, despite having bought 5G spectrum in the 2022 auctions. Vodafone Idea has successfully tested 5G services in Delhi and Pune to meet rollout obligations, but its commercial services will be contingent on the carrier raising funds so as to pay up dues to vendors and place orders with telecom gear makers for 5G equipment. Rival carriers Bharti Airtel and Reliance Jio have set up more than 300,000 5G sites and are on their way to cover all states by March next year. Livemint