In Short:
Vodafone Idea (Vi) paid off a significant portion of its bank debts in the financial year 2024 to reduce total debt in that segment to Rs 40. 4 billion. The telco aims to avoid default to raise more debt and expand its 4G capacity. Vi plans to use earnings from customers to pay off dues and equity raise for capital expenditure to ensure long-term sustainability. The company is looking to cut costs, improve margins, and raise tariffs to boost revenue. Vodafone Idea’s fundraising prospects are closely tied to its ability to demonstrate financial discipline and a clear path towards profitability. The company is actively seeking strategic investments and partnerships to strengthen its balance sheet and support its expansion plans. As it continues to focus on debt reduction and revenue optimization, Vodafone Idea is positioning itself for sustainable growth in the competitive telecom market.
Vodafone Idea Clears Bank Dues Fast in FY24
Vodafone Idea (Vi) efficiently cleared its bank dues in FY24. The telco’s debt from banks and financial institutions was Rs 111.3 billion in Q4 FY23. By FY24, Vi managed to reduce this amount by Rs 70.9 billion, bringing the total debt in this segment down to Rs 40.4 billion.
Focus on Dues Payment
It’s crucial for the cash-strapped telco to avoid defaulting on payments to banks and financial institutions for two main reasons. Firstly, Vi aims to secure more debt from these entities and prevent accumulating late payment interest. Secondly, failure to pay could lead banks and financial institutions to take legal action against Vi.
Financial Strategy and Investments
Though focusing on dues payment restricts Vi’s capacity for capital expenditure on mobile networks, the recent fundraising of Rs 20,000 crore will enable the telco to enhance its 4G capacity and coverage. Vi’s cash and bank balance stood at Rs 1.7 billion by March 31, 2024.
Long-term Sustainability
Vi plans to utilize customer earnings for dues payment and equity raised for capital expenditure to sustain its operations in the long run. To counter losses, the telco needs to cut costs and boost margins. Additionally, Vi aims to increase tariffs to enhance average revenue per user and overall revenues.
