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Vodafone Idea (Vi) has received a credit rating upgrade from Care Ratings, moving from BB+ to BBB-. The revision is expected to bolster the company’s efforts to secure Rs 25,000 crore in debt funding from banks. “Care Ratings Limited (CARE) has upgraded its rating assigned to the Long-Term and Short-Term Bank Facilities, as per the rating letter issued to the Company,” Vi stated in a regulatory filing on Monday.
The Short-Term Bank Facilities rating was upgraded from A4+ to A3, while the Long-Term Bank Facilities moved from BB+ to BBB-. This follows a similar upgrade earlier this month by ICRA Ltd., which assigned a BBB- rating to Vi’s long-term fund-based facilities. A return to investment grade,a key requirement for bank lending, is expected to accelerate discussions around the company’s debt funding plans.
The improvement in Vi’s credit profile comes in the wake of the Indian government converting a portion of the telco’s dues into equity, removing a major hurdle in previous funding negotiations. This move provided much-needed clarity on Vodafone Idea’s Adjusted Gross Revenue (AGR) liabilities.
As part of this arrangement, the government will convert Rs 36,940 crore worth of AGR dues into equity, marking its second equity conversion for the company. Following this, the government is set to hold a 48.99% stake in Vodafone Idea. The equity conversion is in line with the telecom sector relief package announced in September 2021.
Vi continues to face challenges in retaining subscribers
Despite the financial restructuring and rating upgrades, Vodafone Idea continues to face challenges in retaining subscribers. According to the latest TRAI Telecom Subscription Data as of 31 January 2025, the company’s wireless subscriber base declined from 207.26 million in December 2024 to 205.92 million in January 2025, a drop of 1.34 million users.
The telco lost subscribers across all circles except Bihar (+46,954), Mumbai (+1,373), and Odisha (+6,424). Although Vodafone Idea introduced its Half Day Unlimited 4G Plans in December 2024, these offers have yet to stem the ongoing loss of subscribers.