Vodafone Idea Outlines Borrowing Plan to Stay Competitive in India’s Telecom Race

Vodafone Idea Limited (Vi), the country’s 3rd -largest mobile network operator, has presented a detailed debt-raising plan to its lenders. This move comes after Vi recently addressed a key lender concern by securing ₹24,000 crore in equity capital.

Seeking Funds for Network Upgradation

Vi has proposed a two-pronged approach to secure the necessary capital expenditure (capex). First, they have requested ₹23,000 crore from banks in the form of term loans. Second, they have sought an additional ₹10,000 crore in bank guarantees, which would provide financial backing for specific obligations. These combined funds are part of Vi’s targeted capex plan of ₹55,000 crore ($6.6 billion).

Fueling Growth and Innovation

The proposed capex will be crucial for Vi to modernise its mobile broadband network infrastructure in 17 key markets across India. This upgrade is essential for Vi to expand its 4G coverage and initiate greenfield 5G rollouts, allowing it to compete more effectively with rivals Reliance Jio and Airtel, who have already established pan-India 5G networks.

Lenders to Conduct Due Diligence

Before reaching a loan approval decision, the consortium of banks led by the State Bank of India (SBI) will commission a techno-economic viability (TEV) report from a leading consulting firm. This report will thoroughly assess Vi’s financial health and creditworthiness to mitigate lending risks.

Securing Equity, Paving the Way for Debt

Vi’s comprehensive debt-raising plan comes shortly after successfully securing Rs 24,000 crore in equity capital. This accomplishment addressed a major concern of lenders and paved the way for further discussions regarding debt financing.

Crucial Investment for Survival

Vi’s targeted capex of ₹55,000 crore over the next three years is not merely an investment but a lifeline. These funds are critical for Vi’s survival and long-term competitiveness in the Indian telecom landscape. Vi’s ability to expand 4G coverage and initiate 5G rollouts will determine its capacity to challenge Reliance Jio and Airtel’s dominance in the years to come.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.