Vodafone Idea secures ₹14,000 crore loan from SBI-led consortium
A consortium of lenders, spearheaded by the State Bank of India, has given a preliminary nod for a ₹14,000 crore loan to Vodafone Idea (Vi). This financial boost is part of Vi's strategy to revamp its unprofitable operations, including the launch of 5G services. While an official announcement is pending, sources have told Moneycontrol that several lenders, both public and private sector, have committed to this significant loan. Following the new, shares of Vi gained 2% to trade at ₹16.12.
Loan to be disbursed in installments
The loan is expected to be disbursed in installments once the deal is finalized. The funds will be utilized for various purposes including settling operational debts, launching a 5G network and bidding for additional spectrum. Vi is actively pursuing its larger goal of raising ₹25,000 crore following a successful FPO. The company's CEO, Akshaya Moondra, confirmed that banks had requested an equity raise before extending loans to the telecom operator.
VIL's debt reduction and equity infusion
Vi has significantly reduced its total bank debt from a peak of ₹40,000 crore to approximately ₹4,000 crore. The company has requested lenders to release funds equivalent to the equity infusion from its ₹18,000 crore follow-on public offering in April. On May 8, Vi's shareholders approved a preferential equity infusion of ₹2,075 crore from an Aditya Birla Group (ABG) entity, further strengthening the company's financial position.
Analysts cautious about Vi's financial future
Despite the recent equity fundraising and debt funding, analysts remain cautious about Vi's financial future. They argue that the amount raised through the FPO may not be sufficient for the telecom operator. Bernstein analysts stated that while the funding could help Vi expand its network and launch 5G services, it might not significantly impact industry dynamics or Vi's debt position. Analysts at JM Financial suggested that substantial tariff hikes might be necessary for Vi's sustainability.
