Vodafone Idea (Vi) has had talks with lenders, as well as with the leading banking company of the Republic of India (SBI), for a potential recast of loans through a possible hold on interest payments, longer compensation tenures, or lower rates, If the recast is approved it might ease the strain on the telecommunications company that has an exposure of nearly ₹14,000 crores. SBI alone has associate exposure of approximately11000 crores.” After the government extended relief to the company, lenders get a sigh of relief currently,” stated an official familiar with the discussions.
“And if the promoter is able to raise funds or sell his equity, easier compensation terms on loan dues might be a possible scenario.” Vi has assured lenders that it has revived talks with world investors for raising funds that will be used for infrastructure enhancement. With the Reserve Bank of India (RBI)’s June 2019 restructuring framework, banks will be able to renegotiate loan dues to enhance the company’s liquidity on the condition that the promoter brings in equity. Aditya Birla’s Chairman Kumar Mangalam Birla is infusing some of his capital – around $200 million – into Vi and the opposite parent Vodafone Group might explore monetizing a low part of its 28.12% stake in Indus Towers and fund it into Vi.
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Vi gets to save a large part in cash flows over the subsequent four years and this, in turn, has given the corporate the required leverage in its talks with world investors. “Vi’s senior management currently has higher negotiating terms and is meeting various worldwide investors,” a senior executive stated. Last week, SBI Chairman Dinesh Khara said that the government’s call to provide a moratorium to Vi had given the telecom company a temporary lifeline. Last month the Telecom company had discussions to sell a minority stake to global equity investors, as well as Apollo Global Management and Carlyle. The aim was to raise up to $1 billion, or close to,540 crores.
Vi’s lenders are pushing the company to raise funds to begin clearing its future monetary dues at the beginning of December. Kotak Securities estimates the company’s borrowings at ₹23,400 crores and its annual payout interest on bank loans at ₹2,600 crores. The company is looking at a 6000 crore payout regarding the redemption of non-convertible debentures (NCDs), in December. Vi needs the money quickly to build its 4G networks in its sixteen priority markets to contend with competitors like Bharti Airtel and Reliance Jio more effectively, and to avoid subscriber losses.
