Additional Rs 25K crore debt won't cause much stress on Vodafone Idea: Company
Vodafone Idea's plans to raise an additional Rs 25,000 crore via the debt route won't cause any financial stress as the telco has sharply cut bank exposure — by almost Rs 35,000 crore — in the past two-and-a-half years and improved operational performance, top company sources told ET.
The telecom JV of UK's Vodafone Group and India's Aditya Birla Group (ABG), in fact, is counting on the targeted funding primarily to plug its 4G coverage gaps and rein in customer losses to be able to compete more effectively with bigger rivals, Reliance Jio and Bharti Airtel in its priority markets.
The Rs 25,000 crore planned debt funding is in addition to the Rs 20,000 crore that Vi plans to raise via equity and/or equity-linked instruments by the June quarter of FY25.
«Post-announcement of the (telecom) reforms package in September 2021, the overall bank exposure in Vi has been reduced by about Rs 35,000 crore, and therefore, further amounts will be raised via debt funding,» one of the Vi sources cited told ET.
Vi's current bank debt has dropped below Rs 4,500 crore, which is learnt to have encouraged lenders to consider fresh loans to the telco.
The senior company source added that Vi's continuing loss of subscribers is largely due to the lack of adequate 4G coverage in key markets. «This gap in our 4G coverage will be addressed with this new (Rs 45,000 crore) funding via debt and equity.»
The telco's gross mobile user base shrank by 1.36 million to 223.05 million at the end of December, hurt also by the lack of 5G
