DoT has not yet met any prospective investors for Vi : Report

Vi informed the telecom department that great progress had been achieved with multiple sets of investors, but the company had not yet provided any specific information.

Potential investors for Vodafone Idea (Vi) have not been met by the Department of Telecommunications (DoT). Due to its current predicament, the cash-strapped telecom operator is finding it difficult to raise money through equity and loans. The telco is losing customers and hasn't even started rolling out 5G because there isn't enough money to do so. The operator has already paid half of its licence and spectrum usage charge (SUC) for the March quarter, according to an ET report. Additionally, the telco has assured the telecom department that it will pay out 90% of the outstanding balance, plus interest, during the June quarter.

The government won't need to use the bank guarantees if Vodafone Idea continues to pay its bills. However, the government will cash in the guarantees if Vi fails to make the required payments. According to estimates from two weeks ago, Vi is probably going to finish off its financing with potential investors in 10 days. But as of yet, nothing of the sort has occurred. The telco cannot deploy 5G or make substantial investments in its mobile networks until it is able to raise the necessary finances.

Vi informed the telecom department that great progress had been achieved with multiple sets of investors, but the company had not yet provided any specific information. Although a promoter firm also made a Rs. 2000 crore equity injection promise, it hasn't transpired yet. Most likely, the investors want the promoters to invest more money in the business.

The government currently holds the greatest stake in the corporation following the conversion of Vodafone Idea’s outstanding interest debt of Rs 16,133 crore into equity was given the government’s approval. With this conversion, the promotions’ ownership has dropped to 50% from 74.99% and the government now holds 33.14% of the cash-strapped telecom company that is struggling under a debt load of over Rs 2 lakh crore. Government rescue measures for debt-ridden telecom businesses were adopted in 2021, enabling them to convert interest on deferred adjusted gross revenue owed to the government into equity.

Currently, 5G services are being launched in Indian cities by two leading telecom behemoths, Reliance Jio and Bharti Airtel. Both the major telecom companies , Jio and Airtel, recently announced that they have fulfilled their minimum roll-out commitments in all 22 telecom circles and across all frequency bands. Although Vi purchased spectrum for 17 circles at the 5G spectrum auctions, only one circle has had 5G testing confirmed. As a result, the telco has fallen short of the government’s minimum deployment requirement set forth in the Notice Inviting Application (NIA) for the 2022 5G spectrum auction.

Even though the centre had previously stated that it would not impede the management of Vi’s operations, outlining its position. It only decided to take an equity investment in the business since doing so would aid Vi in the near run and allow the business to regain market share. Potential outside investors would be hesitant to put money into a business whose biggest shareholder is the national government.

According to the ET report, Vi is almost ready to obtain a short-term credit of Rs 4000 crore from SBI to cover its outstanding statutory obligations and spectrum installment.