Refinancing of some debt will help free up cash for Vodafone Idea
Vodafone Idea (Vi) has started discussions with major banks, including State Bank of India (SBI), Punjab National Bank (PNB) and HDFC Bank, to refinance Rs 30,000-40,000 crore loans, according to an ET report quoting bankers familiar with the matter. It added that refinancing of some debt will help free up cash for Vodafone Idea, which needs to pay substantial vendor dues – to tower companies such as Indus Towers and network equipment makers like Ericsson and Nokia.
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Indus Towers in January 2023 had made provision of doubtful debt worth Rs 2,298.1 crore on account of troubled balance sheet of Vodafone Idea Ltd (VIL). It is in the process of issuing optionally convertible debentures of up to Rs 1,600 crore to vendor American Tower Corporation to clear its dues.
Vodafone Idea is struggling with over Rs 2 lakh crore debt. The government earlier this month approved the conversion of its over Rs 16,133 crore interest dues into equity. With this conversion, the government has become the single-largest stakeholder in the loss-making telecom firm with a 33.14 per cent stake.
Vodafone Idea will issue equity shares to the government at face value of Rs 10 each. “Ministry of Communications…passed an order today ie 3 February, 2023… directing the company to convert the NPV of the interest related to deferment of spectrum auction instalments and AGR dues into equity shares to be issued to the government of India,” the filing said.
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The relief for the company comes as part of the reforms package announced by the government in September 2021.
“The total amount to be converted into equity shares is Rs 16133,18,48,990. The company has been directed to issue 1613,31,84,899 equity shares of the face value of Rs 10 each at an issue price of Rs 10 each,” the filing added.
Telecom companies need to pay licence fees and spectrum usage charges (SUC) in the form of ‘revenue share’ to the central government. Adjusted gross revenue, or AGR, is the amount on the basis of which the government’s licence fees and SUC are calculated.
