In Short:
Vodafone Idea (Vi) in India plans to raise $1.8 billion through debt from banking institutions. The funds will help Vi pay off dues, invest in 5G rollout, purchase airwaves, and boost 4G networks to compete with Jio and Airtel. Vi aims to raise a total of $3.3 billion through debt and has already raised $2.4 billion through FPO and equity sales. The telco needs to improve its market position and revenue to survive.
Vodafone Idea Plans to Raise $1.8 Billion Through Debt
Vodafone Idea (Vi), the third-largest telecom operator in India, is looking to raise Rs 150 billion or about $1.8 billion through debt. The company aims to secure this funding from banking or financial institutions to pay off dues and invest in capex for 5G rollout and acquiring additional airwaves in upcoming spectrum auctions. Vi also plans to enhance its 4G networks to compete with Jio and Airtel in coverage. Bloomberg reports that Vi intends to raise Rs 150 billion through debt within the next two years as a part of a larger plan to raise Rs 250 billion through debt.
Previous Fundraising Efforts
Vi recently completed a fundraising round of Rs 18,000 crore through India’s largest FPO (follow-on public offer) and an additional Rs 2,000 crore through an equity sale to an Aditya Birla Group entity. The company has initiated discussions with banks like State Bank of India, Punjab National Bank, Bank of Baroda, and other private lenders for this debt financing.
Bank Consortium Formation
State Bank of India is expected to lead a consortium of state-owned and private banks to disburse funds to Vi in installments. Despite facing a significant debt burden, Vi has been diligent in repaying bank dues without major defaults, which has been noted by lenders.
Growth Strategy and Turnaround Plans
The recent fundraising efforts will enable Vi to drive growth through capital expenditures. Kumar Mangalam Birla, Chairman of Vodafone Idea, expressed confidence in a successful turnaround for Vi with this financing. The company aims to regain market share and improve its average revenue per user (ARPU) to strengthen its position against competitors over the coming years.
