Vodafone Idea has reportedly started discussions with Indian banks and other lenders including State Bank of India, Punjab National Bank and HDFC Bank to refinance the debt to the tune of between Rs 3,000 and Rs 4,000 crore.
The move is aimed at freeing up funds for the company, which it needs to make immediate payments to Indus Towers, Nokia and Ericsson. The company has debt obligations of Rs 9,600 crore to be paid to various lenders in September, of which Indus Towers alone owes Rs 7,000 crore. As of September 2022, the total debt of Vodafone Idea is Rs 2.2 trillion.
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The news about the talks comes days after the Center allowed telcos to convert their unpaid interest charges into adjusted gross revenue (AGR) and equity. With 33.44% stake, it will become the largest shareholder of Center Vi.
Reportedly, the company’s owners, India’s Aditya Birla Group and Vodafone UK, have agreed to invest Rs 5,000 crore in the telco. As a result, other parties may be more willing to invest in the business, which is in dire need of capital to fight off Reliance Jio and Bharti Airtel.
The company currently owes Rs 15,080 crore to banks and lenders out of a total debt of Rs 2.2 lakh crore. To upgrade its technology and transition to 5G, the company needs additional funding. Currently, 51% of its 231 million customers are on 4G, with others still using 2G or 3G. In contrast, Jio has 100% customers on 4G, while Bharti Airtel, which has already discontinued 3G services, has 61.8% customers on 4G.
The company’s Average Revenue Per User (ARPU) is Rs 131, the lowest among its competitors, compared to Jio’s ARPU of Rs. 177 and Bharti Airtel’s ARPU Rs.190.