Vodafone Idea’s fundraising plan hits roadblock

Telecom giant Vodafone Idea’s (Vi) plans to raise funds through a consortium of prospective lenders led by Oak Hill have failed over unresolved funding terms and furnishing of guarantees in case of payment defaults, people aware of the matter told The Economic Times.

“Vi’s talks with the Oak Hill consortium have not led to a binding agreement as there were unresolved issues around funding terms, guarantees and claims to the struggling telco’s assets in case of a payment default,” a person close to the global consortium told the publication.

Reportedly, Vi was in talks with the Oak Hill-led consortium to ink the terms of a $2 billion (Rs 15,000 crore approx) credit line via hybrid convertible funding instruments, comprising bonds and warrants. This credit line was supposed to help in the expansion of the 4G network and was a part of Rs 25,000 crore that the company had planned to raise through a mix of debt and equity.

The deadline for exclusive talks with the group of potential lenders including Oak Hill, Pacific Investment Management Co, Sixth Street, Twin Point Capital and Varde Partners with the telecom giant was pushed by a month from January 31 to February 28. But, no agreement was signed during the time, the report said.

After the failure of talks between the potential lender consortium and Vi, the company is already exploring other potential funding partners and is confident of securing funding by the end of this month, one of the people cited above said. The person added that there is surplus cash with US funds, and the Indian telecom business outlook is looking up amid surging data consumption growth, post-pandemic.

The joint venture between UK’s Vodafone Group and Aditya Birla Group reported a consolidated loss of Rs 4,532.1 crore in the third quarter ended December 2020. Vi has been struggling to compete with competitors such as Jio and Airtel that reported nearly 6 percent and 7 percent revenue growth respectively while the company only recorded less than 1 percent on quarter. On the year-on-year (YoY) basis, the revenue declined by 1.76 percent, the firm said in a regulatory filing. MoneyControl