Vodafone Idea in advanced talks to raise ₹5,000cr debt
What's the story
Vodafone Idea, India's third-largest telecom operator, is in advanced talks to raise around ₹5,000 crore through debt financing. The move is part of the company's strategy to strengthen its capital base and support its ongoing turnaround efforts. The debt will be raised by Vodafone Idea Telecom Infrastructure Limited (VITIL), a subsidiary that holds some of the company's telecom infrastructure and renewable energy assets.
Advisory role
Fundraising efforts crucial for financial recovery
The company has appointed JM Financial as the advisor for this transaction, which is likely to be completed in the next two weeks. If successful, this fundraising effort would be a major milestone in Vodafone Idea's long and arduous journey toward financial recovery. The company has been struggling under a massive debt burden and declining subscriber base for years, with its financial troubles worsened by the SC ruling on AGR dues.
Market competition
Fundraise to support network investments and 5G rollouts
The government's decision to convert over ₹53,000 crore of dues into equity came as a major relief for Vodafone Idea. However, the company still needs fresh capital to stay competitive in India's three-player telecom market. Industry experts believe this fundraise will provide enough liquidity for the company's planned network investments through H1 2026. The funds raised will primarily be used for capital expenditure on network expansion and selective 5G rollouts.
Performance improvement
Improvement in subscriber performance
Vodafone Idea's subscriber performance has improved in the recent quarter, with net subscriber losses down to about half a million. This is a huge improvement from the average five million customers it was losing in previous quarters. While it still lags behind its rivals in terms of additions and market share, this reduction in losses is seen as an early sign that operational measures are beginning to take effect.
Funding hurdles
Challenges in raising debt
Raising debt has been a challenge for Vodafone Idea due to uncertainty surrounding AGR liabilities. The company has now turned to private sources of debt funding. Parallel talks with banks for over ₹22,000 crore in loans have been revived, but lenders are waiting for clarity from the government and regulator on how the AGR burden will be resolved in the long run.