Bank guarantee waiver to aid Vodafone Idea's debt raise efforts: Citi
Vodafone Idea shares surged 7% intraday Monday after the government waived off the need for bank guarantees, a move that, analysts said, is expected to unblock the telco’s road to raise fresh bank funding and also benefit its tower vendor Indus Towers.
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Shares of Vi rose over 7% in intraday trade on Monday before closing 4.04% up at Rs 7.77 per share on BSE Monday. Indus’ stock also rose 3.14% to close at Rs 340.15 per piece.
“This is a major relief for Voda Idea which was not in a position to provide these BGs (Rs 24,800 crore) and which was, in turn, proving to be a stumbling block in its efforts to raise debt funding from banks,” stock research firm Citi Research said in a note on Monday.
Vi has already raised Rs 24,000 crore via equity. It has been in talks with banks to raise a further Rs 25,000 crore via loans and another Rs 10,000 crore in BGs or letters of credit to continue its capital expenditure plans for competing effectively with Bharti Airtel and Reliance Jio.
“As stated by the CEO on the 2QFY25 earnings call in Nov’24, ‘Banks are not willing to provide the BG facility as it does not really benefit anything in terms of improvement on operations or cash generation. They are happy to provide the bank funding because that is what will
