Loss-making Vodafone Idea (Vi) has prepaid a short-term loan of about ₹2,700 crore to SBI in a bid to shore up lenders' confidence as it urgently seeks fresh bank funds to tie up equipment supply deals for 5G networks and also clear some of its near ₹15,000-crore trade payables, comprising dues to tower companies, network gear vendors and other suppliers.
With the government showing no signs of urgency in converting Vi's accrued interest on deferred AGR-related dues into equity, external equity funding appears to be further delayed. This leaves the telco with no option but to arrange more debt to firm up its 5G plans.
Meanwhile, Vi's trade payables jumped almost 13.6% sequentially to ₹14,956.2 crore in the June quarter. These payables - part of Vi's current liabilities - include dues to tower firms and network vendors/other suppliers, which were estimated at around ₹9,500 crore and ₹5,500 crore, respectively, at the end of June quarter, people aware of the matter said.
Net Debt Over ₹1.98Lcr
These figures would have gone up further in the succeeding two months, these people add. "Bulk of Vi's tower sector dues are to Indus and ATC, while the vendor dues are applicable to Nokia, Ericsson and Huawei, with the telco owing the most to Nokia amongst the gearmakers," one of the people cited told ET. At June end, Vi's net debt was over ₹1.98 lakh crore, with its deferred spectrum payment dues at over ₹1.16 lakh-crore and debt from banks and financial institutions at ₹15,200 crore. Its cash and cash equivalents were at ₹860 crore.
Vi did not respond to ET's queries till press time Friday. Queries to Indus, ATC, Nokia, Ericsson and Huawei also went unanswered. SBI did not comment. Vi shares closed 1.32% lower at ₹8.97 on BSE Friday.
Some of cash-strapped Vi's top lenders say the recent loan prepayment to SBI is a confidence booster of sorts that should encourage public sector banks to offer fresh loans.
"Vi is likely to sit with public sector lenders, given the 5G expansion focus," a banker, who deals with telco, told ET. Another banker said that a joint lenders' meeting may happen soon to consider Vi's funding requirements.
The telco's newly named chief executive officer Akshaya Moondra recently told shareholders that the company is in talks with various banks for funding arrangements. He said Vi's 5G launch timeline could be set only after these funds are arranged and gear procurements firmed up. He did not give any update on the company's equity fund raising plans. The telco has for long been trying to raise Rs 20,000 crore, split between debt and equity.
Vi's financially stronger rivals,
Reliance
NSE -1.17 % Jio and Bharti Airtel
, are already revving up to launch 5G services next month and have also announced pan-India 5G rollout timelines with plans to splurge top dollars.Jio and
Airtel
, in fact, are expected to spend around $9.1 billion and $7.7 billion, respectively, on 5G capex through FY23-25, which could set them up nicely to corner more revenue share and target Vi's top-end customers in coming months if the latter is unable to respond to the challenge swiftly.
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