Vodafone Idea repays ₹1,500 crore with interest

Giving confidence to investors, debt-ridden telecom player Vodafone Idea Ltd (VIL) has repaid ₹1,500 crore to the holders of non-convertible debentures (NCDs) on due date, according to banking sources. They said that VIL has paid the amount to IDFC First Bank on 13 December, along with the interest amount of ₹115 crore.

The lenders of the telecom service provider were in dilemma over its repayment capabilities. “VIL has been in talks with banks to raise about ₹6,000 crore for meeting its repayment commitments in this financial year. However, the funding has not yet been tied up. They made the latest NCD payment using the bank guarantee which returned by the Department of Telecom (DoT) recently,” said a Mumbai-based banker.

DoT has returned bank guarantees of close to ₹6,000 crore to telecom service providers Bharti Airtel and Vodafone Idea. Vodafone Idea received ₹2,500 crore out of an estimated ₹12,000 crore, while Bharti Airtel received ₹4,000 crore out of the ₹8,000 crore.

VIL has to make payments of ₹2,000 crore by end of December and early January, said company sources. The debt funding is expected to be tied up by then. VIL is also in talks with investors for raising about ₹25,000 crore of equity capital for its growth plans, including for system upgrades prior to its 5G launch.

Expecting the prompt payments, the shares of VIL rallied 64% in less than a month until last week. The shares slipped over 7% in the first two days of trading in this week. On Tuesday, the closing share price was ₹15.15. The market capitalisation of the company stood at ₹44,000 crore. The rival Bharti Airtel is valued ₹4.5 lakh crore in the stock market.

VIL, once the largest telecom player in India after the merger, has been operating in the red due to low tariffs and increasing competition. The company’s total debt comes to ₹1.9 lakh crore as of June-end--- including ₹1.68 lakh crore owed to the government and the remaining ₹23,400 crore to the lenders. State Bank of India has the highest exposure to Vodafone Idea among other lenders.

In October, the board of VIL had approved opting for a four-year moratorium on adjusted gross revenue (AGR) payments. The firm has accepted both spectrum and AGR moratorium, which in turn will help the cash strapped operator to save about ₹1 lakh crore cumulatively. VIL announced a hike in its prepaid tariff plans by 20-22% and 25% in base entry-level voice plans in November. The new tariffs will improve VIL’s average revenue per unit (ARPU) as well as top line and bottom line.