Vodafone Idea reportedly shelves original fundraising plans; eyes to raise Rs 10,000 crore via NCD

India’s third-largest telco Vodafone Idea (Vi) is now eyeing to raise Rs 10,000 crore by issuing papers such as non-convertible debentures as part of its fundraising strategy, Mint reported citing two company officials familiar with the matter. With this, Vi has shelved its original plan to raise Rs 25,000 crore by selling hybrid securities to foreign funds.

“The company is in talks with lenders to raise close to Rs 10,000 crore by issuing papers such as non-convertible debentures,” said one of the two people, and added that Vodafone Idea’s low share price, as well as a difference of opinion with investors over the company’s valuation, has added to fundraising delays.

Vi is also seeking to save fixed costs in certain telecom circles by overhauling its existing operations, they added.

This comes after the big-ticket fundraising plans having hit an air pocket following differences with key members of the prospective lenders’ consortium such as Oak Hill and Varde Partners over funding terms and furnishing of guarantees in case of payment defaults, ET recently reported.

“Promoters Aditya Birla Group and UK’s Vodafone Group Plc believe that the business environment is set to improve considerably for the company, enhancing shareholder value,” said the first person cited above.

Over the past few months, Vi has been in talks with the Oak Hill-led consortium to finalise the terms of a $2 billion (Rs 15,000 crore approx) credit line via hybrid convertible funding instruments, comprising bonds and warrants. The credit line, which was to be used to expand the carrier’s 4G network, was meant to be a part of the overall Rs 25,000 crore that Vi plans to raise via a mix of debt and equity.

Adding to the list of woes, US-based GoldenTree Asset Management left the consortium led by Oak Hill Advisors, which has been aiming to raise around Rs 15,000 crore via hybrid securities.

The other members in the consortium, including Pacific Investment Management Co, Sixth Street, Twin Point Capital and Varde Partners, continue to be part of the group.

As part of the cost-saving strategy, Vi is planning to increase its focus in the top-nine telecom circles, including Mumbai, New Delhi, Kolkata, and Chennai.

“Vodafone will be increasing its focus on premium 5G-ready customers located in nine top telecom circles. This will help Vodafone improve its average revenue per user (Arpu) and cash flows quickly. Vodafone may increase the subscription costs for customers as well,” said the second person, and added that the there could be a potential reshuffle in Vodafone Idea’s workforce owing to planned overhaul operations.

“By implementing the latest strategy, Vodafone should be able to save at least Rs 700 crore in FY2022, which could be used to refinance the company’s dues,” the second person was quoted as saying by the publication.