Vodafone Idea (Vi) is India’s third-largest telecom operator. According to reports, Vodafone Idea seeks a Rs 23,000 crore term loan and an additional Rs 10,000 crore in bank guarantees.
This funding is crucial for Vi’s strategy to compete with larger telecom rivals like Reliance Jio and Bharti Airtel. Both Reliance Jio and Airtel have already deployed pan-India 5G networks.
Vi Plans Major 5G Rollout While Prioritizing 4G Expansion
Vi has been contemplating a significant rollout of 5G services over the next six months. The company plans to invest between Rs 50,000 crore and Rs 55,000 crore over the next three years. Vi has emphasized that while the rollout of 5G is important, its “topmost priority” remains expanding and enhancing its 4G coverage. This initiative by Vi is aimed at strengthening its market position amidst fierce competition in India’s telecom sector, where rapid technological advancements are underway.
Vodafone Idea Seeks Rs 23,000 Crore Term Loan
Vodafone Idea (Vi), a joint venture between Vodafone Plc and Aditya Birla Group, has recently submitted a loan proposal to a consortium led by State Bank of India (SBI). It aims to borrow Rs 23,000 crore to upgrade its mobile broadband network infrastructure in 17 key markets.
Vi’s move follows its recent arrangement of approximately Rs 24,000 crore in equity capital, which meets lenders’ crucial requirement to secure fresh loans. The telecom operator has been in talks with banks over the past months to raise up to Rs 25,000 crore through debt, alongside an additional Rs 10,000 crore in non-fund-based facilities like bank guarantees.
Vi’s Investment Plans and Banking Challenges
J.P. Morgan, following a meeting with Vi’s CFO Murthy GVAS, highlighted that a portion of the targeted $6.6 billion capital expenditure (capex) will be front-loaded. This strategy aims to swiftly narrow the gap with competitors in the telecom sector. Banks involved in Vi’s loan process will request a Techno-Economic Viability (TEV) report from a leading consultancy firm. This report will assess Vi’s financial strength and ability to manage the loan effectively before finalizing the sanction.
However, according to the news report, some banks are cautious about increasing their exposure to Vi. This caution stems from Vi’s significant pending government dues and the intensely competitive nature of the telecom industry. As of March 2024, Vodafone Idea has paid Rs 7,854 crore of its total adjusted gross revenue dues amounting to Rs 58,254 crore, as mandated by a 2019 Supreme Court order.
Vi’s Recent Ratings Upgrade and Stock Performance
Earlier this month, Care Ratings upgraded Vi’s rating to ‘BB+’ with a ‘stable’ outlook. The agency also improved Vi’s short-term bank facilities rating to CARE A4+ from CARE A4, reflecting improved confidence in the company’s financial stability.
On June 12, shares of Vodafone Idea reached a three-month high of Rs 16.70 on the BSE, marking a 3% increase. Optimistic expectations of better earnings drove this surge-. Previously, the stock had hit its 52-week peak of Rs 18.42 on January 1, 2024. As of 10:30 am on a recent Tuesday, Vodafone Idea’s shares were trading at Rs 16.56 on the BSE, indicating ongoing investor interest and market confidence in Vi’s potential for growth and financial recovery.
Also Read:
Supreme Court Mandate Could Halt Fresh Ad Releases
Tesla Shareholders Approve CEO Elon Musk’s $56 Billion Package
Fairplay App Case: ED Raids Seizes Assets Worth INR 8 Cr in Mumbai and Pune
