Vodafone Idea Likely to Tap $2.9 Bn Lifeline to Fuel Financial Comeback

Vodafone Idea is holding discussions with lenders to avail about $2.9 billion in loans to revive itself and compete against rivals like Mukesh Ambani-led Reliance Jio and Sunil Bharti Mittal-led Airtel. The State Bank of India is likely to head the consortium of lenders. The financially troubled telecom company is expected to raise the loan via a mix of domestic and foreign options for a timeframe of about 10 years, Bloomberg reported, citing sources. The development comes around a time when the Aditya Birla Group-led telecom company is taking giant leaps to boost its financial health. 

Last month, Vodafone Idea’s board of directors approved a fund raise of up to ₹ 20,000 crore. The company’s board has yet to decide the route through which the funds will be raised by it.

“Subject to the approval of shareholders’ and/or other requisite regulatory/statutory approvals, raising of funds in one or more tranches...which may or may not be listed up to an aggregate amount of ₹ 20,000 crores,” the company had earlier said in a statement. 

But it's not just the company, which is taking steps to get back on a good financial footing. The Indian government, which already holds a 49% stake in the financially troubled company, is mulling to offer another lifeline to Vi to ease its ₹ 84,000 crore adjusted gross revenue (AGR)-driven dues. The Prime Minister Narendra Modi-led government is considering to increase the repayment tenure of the dues from the present six years to 20 years and applying a simple interest on the due amount instead of compound interest or interest on interest, the Economic Times reported. 

“Apart from these two options, some other creative proposals are also being explored, and the relief may be given by either one or a combination of options,” the Economic Times reported, citing a source. “Since the known or existing options (such as waiving interest and penalties) are not working out, something new has to be forged. But whatever option is finalised, it would be legally tenable,” the source added.