Vodafone Idea in talks to refinance Rs 3,000-4,000 crore of loans

Refinancing of some debt will help free up cash for Vi, which urgently needs to pay substantial vendor dues – to tower companies like

and network equipment makers such as Ericsson and Nokia.

Pending payments have stymied the carrier’s plans to tie up 5G equipment supplies and finalise tower site pacts needed to launch the next-generation services. Rivals

Jio and have a head start, having rolled out 5G services in October last year.

The latest talks come shortly after Vodafone Idea’s accrued interest towards adjusted gross revenue (AGR) arrears was converted into government equity. The transaction was completed effective February 7. The government is now the largest shareholder of the carrier, with a 33.44% stake.

“Vi is in fresh, preliminary talks with lenders seeking the rolling over of some bank debt, but they are yet to submit a formal refinancing proposal … discussions are also on for a softening of loan repayment terms,” a senior banker directly involved in the discussions told ET. Fresh Loans Unlikely
The banker also said Vi’s lenders are unlikely to extend fresh loans just yet, as that would potentially further strain the loss-making telco’s already weak balance sheet – with ₹2.2 lakh crore of debt and a cash balance of just ₹190 crore at end of September 2022. Another person involved in process said the refinancing proposal could be considered, as banks are not extending fresh loans.Vodafone Idea has a ₹9,600 crore debt repayment due in September 2023. That could further restrict the operator’s capital expenditure ability, unless there is some refinancing of existing bank debt soon. Industry insiders say Vi’s co-owners – UK’s Vodafone and India’s Aditya Birla Group – have committed to put in over ₹5,000 crore more in the telco. That could prompt third party investors to put in equity, which the carrier desperately needs to turn around its operations and effectively take on Jio and Airtel. ET’s queries to Vi remained unanswered as of press time on Sunday. , and HDFC Bank also did not respond to emails seeking comment.

Equity Boost
Vi had previously approached its lenders, including SBI, with urgent loan requests, but without any success. Lenders had then sought clarity on the government’s potential shareholding in the telco, and promoters’ plans to infuse equity to shore up investor confidence and business scale-up.

But with the government now clearing the conversion of Vi’s interest into equity, lenders can at least start relooking at refinancing proposals.

As of September-end 2022, Vi’s dues to banks and other lenders totalled ₹15,080 crore. Its trade payables, reflecting arrears to vendors such as tower firms and equipment providers, were ₹15,030 crore. Earlier this month, the government agreed to convert Vi’s ₹16,133.18 crore accrued interest on AGR dues into equity, at ₹10 a share. The decision came after Vi’s promoters promised that they would bring in the necessary funds.