Vodafone Idea’s ₹35,000-crore loan bid faces fresh lender scrutiny

On condition of anonymity, he said that the external techno-economic viability (TEV) study conducted in 2024 to examine Vodafone Idea’s credibility will be updated with new projections and a new TEV will not be conducted. The update will also take into account the recent court decision on adjusted gross revenue (AGR) following the submission of TEV.

“Even though the AGR issue has been resolved, lenders lack clarity on the telco’s spectrum dues, which are considerably higher than the AGR,” said the person cited earlier. “The previous loan offer was based on assumptions about the company’s performance, and these assumptions will now be compared with the facts.”

He said the company was upfront about the data and assisted in the process that would culminate in lenders discussing the plan with the consortium. This person said, “The final decision on the loan will be made from now on.”

Especially, The telecom operator is struggling with debt and fundraising problems and is constantly losing subscribers because it cannot improve its network and reach. Vodafone Idea has lost 7 million subscribers since the completion of TEV.

Arpu from Vodafone Idea was here ₹172 per month as of end-December, whereas Jio’s Arpu ₹213.70. Airtel currently leads the industry ₹256 Arpu per month as of the end of September.

Banks are concerned that Vodafone Idea’s Arpu is also below the industry average due to users’ limited access to the 5G network.

A banker said the new loan proposal has not yet been presented to the consortium of lenders and they will make a call based on what the consortium says. “We have less ₹500 crore exposure to Vodafone Idea and we will consider the offer once we have more details,” said the banker, who also requested anonymity.The consortium of lenders is led by State Bank of India (SBI).

Vodafone Idea has debt ₹According to the company’s statement dated January 27, 1,126 crore was given to banks as of December 31. Additionally, the company increased ₹3,300 crore through non-convertible debentures through a subsidiary in the December quarter.

Emails sent to SBI and Vodafone Idea remained unanswered till press time.

Calculation of dues

Of course, the company currently has total debt. ₹2 trillion as of the end of December, this includes AGR ₹87,695 crore and total deferred payment liability (including accrued but not due interest) towards ₹1.25 trillion as of December 31.

His AGR dues were frozen following the decision of the Supreme Court in October and November last year. The high court had allowed the government to reassess and reassess all AGR dues of Vodafone Idea as of FY 2017, including interest and penalties.

This relief was crucial for the cash-strapped telecom company as it had stated last year that it would not be able to operate after FY 2025-26 as they would not be able to pay AGR installments to the government from March.

The company’s shares have increased by 14 percent since the Supreme Court decision.

Meanwhile, an official aware of the issue said that the government is currently working on an application to recalculate AGR dues and arrive at a final figure.

“Already freezing of AGR dues and long payment moratorium has provided significant relief for Vodafone Idea. This relief should help the company increase its bank debt,” the official said, adding that the company’s spectrum dues were worrying but no further relief was planned so far.

Last year the government was transformed ₹36,950 crore spectrum dues Vodafone Idea converted to equity, increasing its stake in the telecom operator to 49%. The official added that with the relief in AGR dues payments, the government wants to ensure that the company has some breathing room and that the spectrum dues of the exchequer are at least paid.

The company has a spectrum payment obligation of approx. ₹49,000 crore in the next three years. Installment approx. ₹7,000 crore in the first year, ₹Second and around 15,000 crore ₹27,000 crore in the third.

planning for growth

Along with the spectrum installments, the telecom operator announced a new announcement last week. ₹45,000 crore capex plan for the next three years. The company aims to invest in network deployment, double-digit revenue growth, continuous subscriber additions and a threefold increase in earnings before interest, taxes and depreciation (Ebitda) alongside a strong marketing push.

CEO Abhijit Kishore said on an earnings call with analysts last week: “…the next three times EBITDA and the business efficiencies built into that, I think the way we really look at that is it takes into account the spectrum (payout), including the capital expenditures that we talked about. So that’s the part of cash flow that we look at.” said CEO Abhijit Kishore on an earnings call with analysts last week.

“As far as any spectrum moratorium is concerned, I don’t think we have ever represented that and we haven’t represented that today either. It is part of the cash flow we earn and we will pay for it through our cash flow on spectrum. So we are not really talking to the government about spectrum moratorium or any relief on that,” Kishore said.

Vodafone Idea is hopeful that AGR dues decision will help in hikes ₹Including 35,000 crore bank debt ₹10,000 crore unfunded debt. The company is also not currently planning to raise equity capital.

Raising funds is important

Telecom analysts expect the company’s cash EBITDA to be at: ₹9,100 crore in FY26 — Cash EBITDA in FY25 ₹9,200 crore. However, the company’s three-year EBITDA target is approximately ₹30,000 crore is an aggressive figure and the return largely depends on fundraising. EBITDA is an abbreviation for earnings before interest, taxes, depreciation and amortization.

“In case there is no external capital and/or the spectrum dues to be paid are postponed, spectrum payments ₹49,000 crore in FY 2027-29 indicates a significant cash deficit. Therefore, increasing bank debt becomes the key to Vi (Vodafone Idea) revival in the short term,” analysts at brokerage firm Kotak Institutional Equities said in a Jan. 29 note.

Vodafone Idea is confident bank debt will rise in the near term, but this will be difficult to secure ahead of a turnaround in operational performance, according to the brokerage firm. “We expect the intensity of competition in the industry to remain high, given challenging leaders that will make subscriber gains more difficult.”

Even analysts have echoed the concerns expressed by banks regarding Vodafone Idea’s loss of subscribers.

“Moratorium DoT (Department of Telecommunications) is providing VIL with much-needed breathing space, but the situation is still not completely out of control as investors’ attention is focused on delayed debt fund raising, which is critical to support capital expenditure, stem subscriber churn and increase Arpu.”

Vodafone Idea’s number of mobile subscribers decreased by 7 million from 200 million to 193 million as of the end of December.

In comparison, Reliance Jio’s mobile subscriber base was 490 million as of end-December. With fixed wireless access and fiber connections, Jio’s total number of subscribers reached 515.3 million. Bharti Airtel, which has not yet announced its December quarter earnings, had 364 million subscribers as of the end of September.

Kishore said Vodafone Idea has been losing around 15-16 million customers annually in the last six years. So far this year, subscriber loss stands at 5.3 million.