Vi may offer more shares to vendors to clear dues
What's the story
Vodafone Idea (Vi) is considering offering more shares to its vendors, including Nokia and Ericsson, to settle its outstanding operational dues, according to industry analysts. Earlier this week, Vi revealed plans to raise up to ₹2,458 crore through a preferential share issue to Nokia and Ericsson, to clear part of their pending dues. The telecom company aims to pay ₹1,140 crore and ₹703.5 crore to Nokia and Ericsson, respectively, by September 2024.
Debt settlement
Vi's future plans to clear operational dues
JP Morgan, in a note accessed by The Economic Times, stated that while the funds raised from the preferential issue to Nokia and Ericsson will be used to partially pay their dues, further dilution cannot be ruled out. "Vi's recent capital raise is earmarked for new capex, we wouldn't rule out further equity swaps and dilution to vendors in the future to clear operational dues," the note read.
Financial strain
Vi has to clear dues of nearly ₹20,000 crore
Vi is currently grappling with approximately ₹20,000 crore of overall payables, including ₹13,731 crore in trade payables. The company plans to use the recently raised ₹24,000 crore equity capital exclusively for fresh capex to expand 4G coverage and roll out 5G services. Trade payables typically reflect Vi's dues to vendors such as network gear suppliers and tower firms.
Vendor dues
Vi's outstanding dues to Nokia and Ericsson
Before the proposed preferential share issue, Vi owed over ₹1,200 crore to Ericsson and around ₹3,000 crore to Nokia, reported ET, citing sources familiar with the matter. After the share issue, Nokia and Ericsson will hold 1.5% and 0.9% stakes in Vi, respectively. However, it's worth noting that other vendors like Indus Towers may face challenges in recovering their backlog of old dues from Vi, estimated at around ₹10,000 crore.