Banks unwilling to extend new credit to Voda Idea without promoter funding

For more than 9 months, there have been talks between Vodafone Idea Limited and its lenders to raise Rs 10,000 crore in debt. According to sources, despite rounds of negotiations, banks are unwilling to approve new lines of credit for the telecom company, reported Businessline.

The company has sought new loans from its current bankers. These banks include State Bank of India, IndusInd Bank, IDFC First Bank, YES Bank, and IDBI Bank. However, most banks have either rejected the request or placed it on hold.

A top executive of a private bank told Businessline, “Without Vodafone Plc and Aditya Birla group infusing the committed capital into the company, we cannot budge.”

In March 2022, Vodafone Idea announced that Vodafone Plc would pump in Rs 3,375 crore of capital in its Indian arm, while the Aditya Birla group committed to bring in Rs 1,125 crore. This was as part of its Rs 14,500-crore mega fund-raise plan. “We are yet to see the promoters infuse the money,” asserted another senior banker on condition of anonymity.

When Businessline contacted Vodafone Idea, the company’s representative said they are still in contact with potential lenders for additional credit lines.

When the government agreed to convert Rs 16,130 crore in adjusted gross revenue (AGR) dues into equity representing a 33 per cent share in Vodafone Idea in October of last year, it is gathered that capital infusion by promoters was also one of the unstated requirements set forth by the government. On September 14, the Finance Ministry accepted the proposal.

In fact, sources say in the last 8–12 months, banks have been paring their exposure to Vodafone Idea. A banker said, “The company is in a better position now than it was in December last year. It is a standard account for banks. However, as part of deleveraging the corporate book, some banks have brought down its exposure to the telecom company, and hence will not be able to increase the loan outstanding once again.” With smaller private banks particularly faced with this issue, bankers say roping in a new investor may be the best way out for Vodafone Idea.