Vodafone Idea dials SBI for up to Rs 16,000 crore loan to meet its immediate 4G capex needs

New Delhi: Debt-laden telecom operator Vodafone Idea (Vi) is in talks with the State Bank of India (SBI) for a fresh Rs 15,000-16,000 crore loan to tackle its immediate 4G capex needs, pay gear supply contracts for its pending 5G rollout and to make payments to some vendors.

Citing three people with knowledge of the matter, the ET reported that the fundraising through debt, discussions for which are underway, is stalled as the state-controlled bank wants clarity on the Centre’s potential shareholding in Vi, as well as the telco’s turnaround strategy.

A senior banker directly involved in discussions told the financial daily: “The team is in talks with Vi, but it’s at a nascent stage… some clarifications have been sought. . . on when the government will convert the telco’s interest liability into equity and its business plans.”

The daily cited another person familiar with negotiations as saying the beleaguered telco’s plan would be put before SBI’s apex credit committee to decide terms only after getting clarity on the telco’s business plans.

In the second quarter, Vi—the joint venture of Aditya Birla Group and Vodafone Group—had net debt of roughly Rs 2.2 lakh-crore. Early in September, Vi prepaid a Rs 2,700-crore short-term loan to SBI in an attempt to boost lenders’ confidence. The telco ended the September quarter with a gross cash balance of Rs 190 crore.

Vodafone Idea was planning to raise Rs 20,000 crore via a mix of debt and equity, in addition to the promoter equity infusion of under Rs 5,000 crore received before May.

However, the loss-making telco has not heard back from the Centre on converting its Rs 16,130-crore accrued interest on deferred adjusted gross revenue (AGR)-related dues into equity, and this is vital for the company to induct investors and raise funds for expanding its 4G network and outlining its 5G rollout plans.

Analysts are of the view that the government shareholding to be nearly 33 per cent after conversion, making it the single largest shareholder in the telecom company.

The government wants the telco to unveil a clear fund-raising strategy, including more promoter infusion, before it gives the green signal for the conversion.

SBI also wants to know whether Vi’s promoters plan to infuse any more equity into the struggling telco, a third executive, aware of loan talks, told the publication.

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