Aditya Birla Group chairman Kumar Mangalam Birla is close to investing at least $150 million in Vodafone Idea Ltd in his personal capacity, two people aware of the matter said, to keep the group’s cash-strapped telecom business afloat. as an immediate remedy.
“The issue of fresh convertible or equity is under consideration. Birla is likely to invest from his personal assets earlier this month,” said one of the two people above, on condition of anonymity.
“This capital infusion by Birla is significant. Following Birla’s investment in an individual capacity, Vodafone Group Plc (the company’s UK-based promoter), also plans to invest a similar amount in Vodafone Idea, either as an investor or as a consortium of investors. As part of that, which together can invest close to $1 billion in Vodafone Idea in March 2022,” said this person.
Birla’s capital infusion is aimed at building investor confidence and helping the company meet its immediate working capital needs, especially related to the introduction of new services to attract new customers, the person said.
Vodafone Group may use the proceeds from the planned sale of stake in Indus Towers to invest in Vodafone Idea, through a 69.85% stake jointly owned by Vodafone Idea’s rival Bharti Airtel and Vodafone Group.
Spokespersons of Aditya Birla Group and Vodafone Group did not respond to emails seeking comment.
On 13 October, Mint reported that Vodafone Idea promoters may invest $400 million to strengthen the company. Ruling out such a possibility, the decision to infuse promoters’ money comes after the government announced a rescue package, including four years’ payment on regulatory dues, to help prevent further deterioration in the financial health of telecom operators. Vacation is included.
Aditya Birla Group holds 27% stake in Vodafone Idea through Grasim Industries, Hindalco Industries, Birla TMT Holdings and other group companies. Vodafone Group holds a 44% stake in the Indian unit.
On 4 September 2020, the board of Vodafone Idea approved the proposal to raise the maximum amount. ₹25,000 crore from outside investors. Over the past one year, the telecom operator has held several talks with several strategic and financial investors to raise funds through a mix of equity and hybrid debt.
However, in view of the annual regulatory dues, the question of its existence has stalled. ₹25,000 crore in the next decade. However, in a major relief to the company, on 16 September, the government announced a four-year moratorium on regulatory dues, allowed 100% foreign direct investment in telecom through the automatic route, and adjusted gross revenue (AGR). redefined.
The relief package has improved the viability of Vodafone Idea. Mint reported on September 23 that the company is reviewing the terms of its planned fundraising and may also drop plans to monetize the asset.
Still, the company has to pay ₹9,000 crore loans to banks before the end of the current financial year, including ₹5,000 crores of non-convertible debentures.
Vodafone Idea’s gross liabilities including regulatory dues stood at approx. ₹1.9 trillion as of March 31. the company owes ₹48,000 crore to eight banks led by State Bank of India. loan amount out of ₹23,000 crore, and the rest is in the form of bank guarantee.
Vodafone Idea’s annual dues to be increased by repayment after four years of paid leave ₹24,800 crores at present ₹43,000 crore, while the dues of the government are likely to increase ₹From FY21 to . up to 1.6 trillion ₹2.2 trillion, according to the September 16 Nomura note to customers.
According to a recent report by Motilal Oswal, while the government’s relief package has removed the immediate overhang of bankruptcy, it still requires capital to address almost cumulative liabilities. ₹12,000 crore till FY22-23
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