Vodafone Idea re-engages with banks for debt funding; plans to use internal cash generation to clear debts: CEO Akshaya Moondra

Vodafone Idea -FPO-2

Vodafone Idea has started engaging with a consortium of banks again for debt funding towards the execution of our overall network expansion plan, chief executive officer (CEO) Akshaya Moondra.

"...we've been engaged with the banks for a long time, and it was their ask that first the equity raise should be completed, so we've done that. We have started engagement with the banks again. I will not be able to give you a timeline, but all that I can say is that we have some capital available, and we'll be able to close the discussions with the banks in good time," Moondra said during an earnings call on May 17. "In the time when we need those facilities, they will be available."

The discussions are taking place to raise Rs 25,000 crore and additional non-fund-based facilities of up to Rs 10,000 crore.

"....we are looking at is the fundraising that we are doing, which is the equity which has already been raised on the preferential issue of about Rs 20,000 crore and up, and Rs 25,000 crore of funded debt and Rs 10,000 crore of non-funded...about 55,000 crores of overall facility available. The plan is to use that...There is somewhat some fungibility there, but at an overall conceptual level over the next three years, we propose to use it for CAPEX," Moondra added.

Post the telecom reforms package in September 2021, its bank exposure has reduced by Rs 34,600 crore.

Vodafone Idea's equity fundraiser coupled with debt funding will enable it to kickstart the investment cycle to expand our 4G coverage as well as launch 5G services, the top executive said.

"This moment in some way marks the beginning of Vi 2.0, and from here on, Vi will stage a smart turnaround to effectively participate in the industry growth opportunities," he added.

The executive said that Vodafone Idea's internal cash generation would largely be used for clearing the existing debt, including clearing outstanding vendor dues.

"In terms of the government liabilities post the moratorium, what we believe based on our outlook today is that in FY' 26 and FY27,  we will probably be looking at the conversion of the instalments, which are as per the reforms package convertible. That is what we are currently looking at," he added.

On 8 May, Vi's shareholders approved equity infusion of Rs 2,075 crore on preferential basis, from an Aditya Birla Group (ABG) entity, at an issue price of Rs 14.87 per share. This coupled with the preferential equity raise of Rs 494 crore in 2022 from Vodafone Group and ABG takes the total fund infusion by both the promoter groups to Rs 7,000 crore between March 2022 and May 2024.

Post the FPO, preferential allotment to promoters and conversion by American Tower Corp., the promoter shareholding stands at 38.2% and government shareholding at 23.8%.