Vi board to meet and discuss fundraise

In order to discuss raising money by issuing preferred convertible debentures to a seller, Vodafone Idea (Vi) has announced that its board would meet on October 21.

Analysts and industry officials speculated that this vendor might be Indus Towers, the tower company is owed over Rs 6,800 crore by Vi.

In September 2020, Vi initially disclosed an intention to raise Rs 25,000 crore with a combination of loan and equity. From promoters, it has received just over Rs 4,900 crore, the majority of which was utilised to pay down some Indus debt. We still need to raise the remaining cash.

On the BSE on Wednesday, the shares of Vi and Indus each increased by 0.7% to close at Rs. 8.52 and Rs. 191.20, respectively.

With almost 253 million users, the carrier requires money to invest in 4G CAPEX as well as to secure vendor contracts for 5G deployments, for which it is facing increased pressure to pay its outstanding debts. Additionally, the telco owes ATC, another tower firm, Rs. 2,400 crores.

Vi owes vendors, including Indus and ATC, more than Rs 12,500 crore as of September 30. The company’s net debt at the end of June was above Rs 1.98 lakh crore, while cash and cash equivalents were at Rs 860 crore.

Industry insiders suggested that if Vi issues convertible debentures to Indus Towers, that might be a means for that company to devise a strategy to pay off some of its debt.

Vi had received a warning from Indus that if payments weren’t made, accessibility to tower sites would be restricted starting in November 2022. Vi responded by informing stock exchanges that it was negotiating “softer payment terms” with Indus.

Indus might also issue debentures and collect some periodic interest, which would boost its cash flows. Analysts also noted that if Vi were to cease operations, Bharti Airtel would be the tower company’s only significant tenant, which would be in the interest of Indus.