According to persons familiar with the current negotiations, Vodafone Idea Ltd (Vi) intends to inject total equity of 14,000 crores shortly as part of its business rehabilitation strategy. Existing promoters Aditya Birla Group (ABG) and Vodafone Group Plc from the United Kingdom would contribute half of the total sum, they claimed.
ABG and Vodafone Group would shortly invest 2,000 crores in the firm as new stock, according to a proposal filed to the government earlier this month. Since the government’s telecom revitalization package in September 2021, the promoters have already invested 5,000 crores in new stock. According to the persons stated above, as part of the recovery plan, the promoters would work with the firm to raise an additional 7,000 crore from external investors, either as direct stock or via convertible structures.
Debt reduction at the bank
On February 15, ET reported that ABG, which owns about 18% of Vi, was in negotiations with overseas lenders to obtain further money to be injected as promoter stock.
ABG, Vi, and Vodafone Group did not reply to requests for comment.
Vodafone Idea CEO Akshaya Moondra stated in the fourth-quarter earnings that the company was in advanced agreements with the three investors to raise debt financing through equity fusion. After guarantees from the promoters of more equity infusions, the Centre approved the long-awaited conversion of Vodafone Idea dues worth Rs 16,133 crore into stock in February.
According to the persons listed above, Vi has also requested further borrowings of Rs 25,000 crore in currency loans from local lenders in exchange for the pledged new equity.
“Vi has reduced its overall bank debt from the peak level of Rs 40,000 crore to around Rs 12,000 crore currently and the company has asked lenders to release funds commensurate with the equity infusion that has taken place already from the promoters,” said another person.
Analysts predict that Vodafone Idea would face a financial constraint of Rs 25,000 crore in FY26, necessitating a significant increase in existing pricing to make up the difference. Vi lost 1.3 million 4G subscribers in February, the carrier’s worst fall in 21 months. To stop attrition, it must invest aggressively in 4G infrastructure.
