Vodafone Idea (Vi), a debt-laden telecom operator, anticipates finalizing a fundraising agreement with an SBI-led consortium to back its extensive $5.4 billion (₹45,000 crore) capital expenditure plan. This plan spans three years and aims at network upgrades and 5G expansion. The company has already raised an initial tranche of $765 million (₹6,400 crore), which includes $142 million (₹1,183 crore) from warrants and debt proceeds from external commercial borrowings (ECBs) and Indian private banks.
Vi's CEO, Abhijit Kishore, expressed optimism about closing discussions with six to seven public sector banks, led by the State Bank of India. The financing strategy involves three main groups: public sector banks, Indian private banks, and foreign banks providing ECBs. The company has made significant progress across all three cohorts and has already placed orders for $1.08 billion (₹9,000 crore) in capital expenditure, with execution already underway.
The broader funding effort seeks $4.2 billion (₹35,000 crore) in fresh funding, comprising a $3 billion (₹25,000 crore) term loan and $1.2 billion (₹10,000 crore) for working capital. This comes after the Department of Telecommunications (DoT) significantly reduced Vi's adjusted gross revenue (AGR) liabilities, providing much-needed cash flow relief and allowing a 10-year moratorium on a substantial portion of its dues. While SBI has reportedly agreed to its share of the loan, it awaits the participation of private banks, and the disbursement of funds is contingent on all lenders approving their respective portions. Vodafone Idea's ratings for certain long-term bank facilities were upgraded by agencies Crisil and ICRA, and its bank debt stood at $25 million (₹211 crore) as of June 30, with cash and bank balance at $787 million (₹6,558 crore).
Analysts from Citi Research and Morgan Stanley note that with regulatory uncertainty largely behind it, Vi is better positioned to close its debt raise. However, Morgan Stanley suggests that a tariff hike of at least 20-25% would be necessary for the company to sustain its market position and meet future obligations, including significant spectrum-related payments coming up in subsequent fiscal years.
