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Vodafone Idea (Vi), India’s third-largest telecom operator, is said to have prepaid (paid for in advance) Rs 2700 crore to the State Bank of India (SBI). This is to regain the lenders’ trust, as the telco requires urgent finance for 5G equipment agreements.
Vodafone Idea needs to raise new funds through debt. The government is not accelerating the process of converting Vi’s accrued interest dues into equity for itself.
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The telco will be unable to raise new funds from outside investors until the government completes its portion of acquiring shares in the company.
No signs of urgency by government in converting Vi’s accrued interest
External equity investment appears to be further delayed as the government shows no signs of urgency in converting Vi’s accrued interest on deferred AGR-related dues into equity. This leaves the telco with no choice but to raise further debt to fund its 5G plans.
Meanwhile, Vi’s trade payables increased by about 13.6% sequentially in the June quarter to 14,956.2 crore. These payables, which are part of Vi’s current liabilities, comprise tower firm and network vendor/other supplier dues, which were estimated to be roughly 9,500 crore and 5,500 crore, respectively, at the end of the June quarter, according to persons familiar with the matter.
Nokia is the biggest vendor of Vi
When it comes to only vendors, Vodafone Idea owes the most money to Nokia. The telco also owes money to Ericsson and Huawei. The telco’s largest debt is with ATC and Indus, two tower companies. According to the publication’s analysis, Vi’s net debt was Rs 1.98 lakh crore.
Prepaying the loan amount to SBI could enhance confidence. Vi will want quick access to new money in order to put up 5G while also expanding 4G across India.
Vi is in talks with multiple banks about finance arrangements
Moondra, the telco’s newly appointed CEO, informed shareholders that the company is in talks with multiple banks about finance arrangements. He stated that Vi’s 5G launch date could be defined only if these resources are secured and equipment procurements are finalised.
He did not provide an update on the company’s plans to raise equity funds. For a long time, the telco has been attempting to raise Rs 20,000 crore in loans and equity.
Vi’s net debt was more than 1.98 lakh crore at the end of June, with deferred spectrum payment dues above 1.16 lakh crore and debt from banks and other institutions exceeding 15,200 crore. It has 860 crore in cash and cash equivalents.
Vi’s share was trading at Rs 8.97 on BSE at the close of business hours on 02nd Sep. Industry experts are treating this prepayment as a confidence booster.
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