Vodafone Idea has tried to raise Rs 25,000 crore over the past year but has so far failed. After the government’s relief plan was announced, the company hopes to raise new funds.
In the past, the two promoters have said they will not be investing new money in the business. Vi has struggled to survive in a hyper-competitive market and is constantly losing subscribers.
Vodafone Plc has a 44.39% stake in Vi while Aditya Birla Group has a 27.66% stake.
On September 15, the Cabinet approved a relief plan for the telecommunications sector that includes streamlining the definition of the AGR to exclude non-telecommunications revenues, 100% foreign direct investment (FDI) through automatic, an option to benefit from a four-year moratorium. on AGR and spectrum fees, but with net present value (interest) protected, among other measures.
The interest which will be calculated as “MCLR + 2%” can be paid to the government in the form of equity. DoT officials said release guidelines for the same will be announced soon.
In a recent interview with ET, Vodafone Idea Managing Director Ravinder Takkar said, “Government announcements have been a game-changer in fundraising. We spoke to investors and the concerns they raised were resolved. We expect full clarity on the package. The Cabinet has announced its decisions and they are converted into specific directives, they should arrive in a few days. This will allow us to restart the fundraising process. We expect a fairly quick turnaround time as the issues raised by investors have been resolved ”.
According to Takkar, Vodafone and ABG have invested over Rs 1,90,000 crore in Vodafone Idea over the past 10 years.
Market experts have predicted that the government could end up owning a “significant” stake (from 26% to controlling stake) in Vodafone Idea at the end of the moratorium period if the phone company chooses to pay accrued interest or annual payments in the form of equity. .
Jefferies had said the moratorium would provide liquidity relief to the telecommunications company and “could lead the government to take a significant stake in VIL.” He predicted that the government could hold 26% of Vodafone Idea’s capital after four years if the phone company chooses to pay the total interest of Rs 9,000 crore through equity.
However, dismissing these concerns, Takkar said: “… the government has no interest in owning other telecommunications companies in the country. They have no intention of running another business. They have told us very clearly that you are the experts in handling this, they want us to do it and that we are competitive in the market and that we support customers ”.
The struggling telecommunications company had a total gross debt of 1.91 lakh crore, as of June 30, 2021. It includes a deferred spectrum payment of Rs 1.06 lakh crore and an AGR liability of Rs 62,180 crore. He owes Rs 23,400 crore to the banks as debt.