Vodafone Idea might raise up to $1 Bn in Equity

Vodafone Idea is looking close to signing on a minority stakeholder, raising up to $1 billion in the process. The telco has been in advanced talks with Apollo Global Management and Carlyle within the next 2-3 months.

Vi Close to Getting the Bag

Sources said that after this, Vi can present an FPO, to raise another $1 billion by June 2022. One of the people stated, "Vi is open to providing a minority stake to world PEs if there may be settlement on valuations and phrases".

Since the government announced the telecom relief package in September, the telco has seen considerable relief in cash flows and therefore has become a more lucrative option for potential investors than maybe 2-3 quarters ago. As such, the telco has ditched the debt plan, and focus now solely remains on bringing in a minority stakeholder. However, a $1 billion fairness equity infusion will translate to about 24% stake in the telco, bringing the incoming stakeholder almost at par with the co-promoters.

The telco will see much financial relief; it has opted for the 4-year moratorium on spectrum payments, under the relief package. Along with this, it will benefit from the government reducing the need of BGs for licensing to 20%; this will see BGs worth Rs. 23,000-25,000 crore returned to Vodafone Idea. Furthermore, the redefining of AGR dues will also see the telco gain on annual cash flows. All in all, the relief package will be one of the key factors behind the telco's survival.

What's more, multiple media reports have stated that the co-promoters of the telco, Aditya Birla Group, and Vodafone Plc, will also infuse around $700 million-$1 billion soon as fresh equity, after months of denying the same.

The telco has also been at work trying to sell YOU Broadband, its Fixed Wireline subsidiary, along with its optical fiber business, for another billion dollars.

Vi's Lenders Want Fundraiser Deal Closed Soon

The telco's lenders, who have been increasingly jittery over the past few months, are now pushing Vi to complete the fundraiser soon. The telco needs to start paying its debt back from December, which amounts to Rs. 23,400 crore per Kotak Securities. Therefore, Vi will have to pay around Rs. 2,600 crore annually. From the same time, the telco will also have to pay Rs. 6,000 crore to redeem non-convertible debentures.

It has been more than an year since the led telco started talks of a fundraiser to raise Rs. 25,000 crore. In August, it had written to the government, saying that it had been unable to do so as the telecom sector was "unviable". So far, Vi has been unable to invest enough capex into its 4G networks, leading to customer churn to its financially stronger rivals in Jio and Airtel.

However, the situation seems to have taken a turn for the better for the telco now; it was on the verge of bankruptcy not so long ago, though it remained stubborn in not filing for one. The resilience paid off; the air around the telco has become increasingly positive, and soon, it can close its long drawn-out fundraiser.