After monetizing its stake in telecom tower company Indus Towers Ltd, Vodafone Group Plc is planning to invest as much as ₹3,000 crore of equity in its Indian telecom joint venture, Vodafone Idea Ltd (Vi). This decision follows the recent successful sale of an 18% stake in Indus Towers for approximately €1.7 billion (around ₹15,300 crore).
The funds raised from the Indus stake sale will be used to repay outstanding bank borrowings secured against Indus Towers shares.
Additionally, Vodafone Plc may raise some amount in the form of debt to fund its investment in Vodafone Idea. The move aims to strengthen Vodafone Idea's network coverage and support the establishment of its 5G network in key geographies across India.
Besides, CNBC TV18 recently reported that Bharti Airtel is in talks with Vodafone Plc to buy an additional 3 percent stake in Indus Towers. If the transaction with Bharti Airtel is executed at a similar price range as the recent block deal, Vodafone Plc could garner an additional ₹2,500 crore.
Vodafone Group’s plans to invest equity into Vi come on the back of a successful Rs 18,000 crore follow-on public offering by the telco in April, which saw participation from investors such as GQG Partners, Fidelity, HDFC MF, and Motilal Oswal MF, among others.
Vi has faced significant regulatory dues, which have impacted its financial health. The Department of Telecommunications (DoT) had initially slapped an AGR demand of 58,000 crore on Vodafone Idea. However, the principal component of this demand is 25%, while the rest comprises interest, penalty, and interest on penalty. As of March 2024, Vi's total AGR dues stand at ₹70,320 crore.
Vi has filed a curative petition in the Supreme Court seeking relief. If successful, analysts estimate that its AGR liability could plunge by almost 46%, reducing the dues to around ₹38,400 crore. This relief would provide some cash flow relief, but Vi still faces significant annual payouts.
So far, Vi has paid 50% of its license fees and SUC dues for the March quarter. The company has assured the DoT that 90% of the dues for the June quarter will be cleared in a staggered manner along with interest payment.
After the four-year moratorium, Vi's annual dues repayment is expected to increase from the current 24,800 crore to ₹43,000 crore. Dues to the government are also projected to grow from 1.6 lakh crore (as of FY21) to 2.2 lakh crore after the moratorium ends.
Advertisements