The fundraising via debt – talks for which are ongoing for over a month now – though, is held up as the country’s largest lender seeks clarity on the government’s potential shareholding in Vi, as well as the telco’s business scale-up plans.
“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,” a senior banker directly involved in discussions told ET. Another person aware of the talks said Vi’s proposal would be placed before SBI’s apex credit committee to finalise terms only after obtaining clarity on the loss-making telco’s expansion plans.
Hanging Fire
As of press time, ET’s queries to SBI, Vi, Vodafone Group Plc and the Aditya Birla Group were unanswered. Vi shares ended 2.23% higher, at Rs 8.25, on the BSE on Wednesday.
Vi had net debt of around Rs 2.2 lakh-crore in the second quarter. Early in September, the telco prepaid a Rs 2,700-crore short-term loan to SBI in a bid to boost lenders’ confidence. The loss-making operator ended the September quarter with a gross cash balance of Rs 190 crore.
In May, Vodafone Idea reiterated its September 2020 announcement that it plans to raise Rs 20,000 crore via a mix of debt and equity. This was in addition to the promoter equity infusion of under Rs 5,000 crore received before May.
However, continuing delay on the government’s part to convert Vi’s Rs 16,130 crore accrued interest on deferred adjusted gross revenue (AGR) related dues into equity has delayed the equity infusion by potential third-party investors. These investors also want clarity on government shareholding before committing funds, leaving the loss-making telco to arrange more debt to meet its immediate needs.
Analysts estimate the government shareholding to be around 33% after conversion, making it the single largest shareholder in the telco.
Vi is now in a Catch-22 situation, with the government too wanting the telco to present a clear fund-raising plan, including more promoter infusion, before it goes ahead with the conversion.
A third executive, aware of loan negotiations, said SBI also wants to know whether Vi’s promoters – UK’s Vodafone Plc and India’s Aditya Birla Group – plan to pump any more equity into the struggling telco. The bank has also sought an update on any global strategic investor participating in the operator’s pending external fundraise.
Vi had received a shade over Rs 4,900 crore from promoters earlier this year. But a bulk of that cash was used to clear some dues to tower company Indus.
Optimistic About Vi
Lenders, though, are open to supporting Vi as, over the past year, the telco’s dues to banks and financial institutions have shrunk by over a third – from Rs 23,400 crore in April-June FY22 to Rs 15,080 crore in July-September FY23.
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