The first tranche of OCD redemption will now be extended to 18 months by Vi and ATC

As the ATC was having trouble repaying its debts, the telco issued OCDs to it worth Rs 1600 crore. Two tranches of Rs 800 crore each are intended to be used to complete the OCDs

The first tranche of OCD (optionally convertible debentures) will be redeemed over a period of 18 months instead of 6, as has been agreed upon by Vodafone Idea (Vi) and American Tower Corporation (ATC). The first OCD tranche was meant to be redeemed in accordance with the original agreement on August 28, 2023, six months after the original due date. However, as per the terms of the agreements between the two businesses, that has been extended to 18 months, according to Vi's Monday morning exchange filing.

As the ATC was having trouble repaying its debts, the telco issued OCDs to it worth Rs 1600 crore. Two tranches of Rs 800 crore each are intended to be used to complete the OCDs.

The recent surge in the stock price of Vodafone Idea can be attributed to discussions regarding potential upcoming fundraising. There have been rumours that Vi has terms sheets from some of the potential investors with whom she is in talks. As a result, Vi's stock gathered significant momentum and is currently trading at a significantly better price.

However, it is hoped that the fundraiser will enable the telco to raise a sizable sum of money. Any sum that does not assist the company in increasing capex and eliminating debt is insignificant. In order to keep its current consumers and attract new ones, Vi needs to invest more in its networks.

Once the moratorium period is up, the telco would face mandatory payments per year of roughly Rs 40.000 crore starting in FY26. Vi must therefore raise a substantial sum of money to increase sales. The telco also need an increase in ARPU (average revenue per user), but that won't happen unless and until a tariff increase goes into effect.

In addition, Vi has obligations to other vendors besides ATC, such as Indus Towers, Ericsson, Nokia among others.

In order to pay its statutory dues, Vodafone Idea (Vi) has also asked the Department of Telecommunications (DoT) for further time. The telecom department wrote to Vi on July 21 because the carrier has not paid the statutory dues to the DoT. In response, Vi stated that it is experiencing cash challenges as a result of the delayed funding.

For March FY23 quarter and June FY24 quarter, the telecom operator reportedly requests an extension until the end of December to pay the remaining 50% of licence fees and 90% of spectrum usage charges. Vodafone Idea informed DoT that it is focused on raising money and that its promoters are dedicated to helping the business.