India: Vodafone Idea plans to raise $3.3b to pay off dues

Photo: REUTERS/Danish Siddiqui

Vodafone Idea Ltd on Friday said it will raise as much as 25,000 crore as the company seeks to pay off dues and restore its financial health after last year’s adverse Supreme Court order threatened its survival.

The company’s board has approved the fundraising just days after the top court allowed telcos, including Vodafone Idea, 10 years to settle about 1.4 trillion in dues to the telecom department. Out of this, Voda Idea owes the government more than 58,000 crore.

The fundraising will be through the sale of shares and non-convertible debentures, the company said in an exchange filing. Both routes of fundraising have a limit of 15,000 crore each.

Analysts said Vodafone Idea needs fresh equity, higher tariffs and concession in government levies to continue operations, besides paying the annual instalment of the adjusted gross revenue-related dues that include spectrum usage charges, license fee, interest, penalty and interest on the penalty.

Mint reported on 3 September, citing two people aware of the negotiations, that Amazon.com Inc. and Verizon Communications are set to resume talks to buy a significant stake in debt-ridden Vodafone Idea. The stake-sale talks were paused because the court was then considering whether to allow telcos to pay dues in a staggered fashion.

On Tuesday, the Supreme Court granted telcos 10 years for payment of AGR dues. The court ordered an upfront payment of 10% on the total dues by 31 March. The remaining have to be paid in 10 equal instalments at an interest rate of 8%.

“From FY23, Vodafone Idea will need to resume 15,500 crore auctioned spectrum deferred instalments. This including annual AGR payment of 8,000 crore, capex of over 5,000 crore (to maintain telecom market share) and bank interest would total over 30,000 crore, which is significantly higher than operating cash flows at current Arpu,” IIFL Securities said in a report.

Analysts believe that Vodafone Idea will need to more than double its average revenue per user (Arpu) to meet its AGR payment obligations. Vodafone’s Arpu fell to 114 in the June quarter from 121 in the fourth quarter of fiscal year 2020.

The apex court’s verdict, however, favours rival Bharti Airtel Ltd, which has fully provided for the AGR dues estimated at 43,980 crore.

This article was first published on livemint.com.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.