Vodafone Idea in talks with banks for loan recast

Vodafone Idea in talks with banks for loan recast

Beleaguered telecom services operator Vodafone Idea (Vi) is believed to have
held talks with lenders, including consortium lead State Bank of India (SBI), for a possible recast of loans through a potential standstill on interest payments, longer repayment tenures or lower rates, according to a media report.
The recast, if approved, could ease the financial strain on the telco that has a funded exposure of nearly Rs 14,000 crore. SBI alone has an exposure of about Rs 11,000 crore.
Vi has also revived talks with global investors for raising funds that will be used for infrastructure enhancement.
Under the Reserve Bank of India’s (RBI) June 2019 restructuring framework, banks can allow renegotiation of loan dues to improve the company’s liquidity if the promoter brings in equity.

Aditya Birla Group’s Chairman Kumar Mangalam Birla is considering infusing some of his own capital – around $200 million – into Vi while the other parent Vodafone Group may explore monetising a small part of its 28.12% stake in Indus Towers and channel it into Vi.
Discussions with the lending banks come on the back of Vi accepting the government’s lifeline in the form of a standstill on spectrum and adjusted gross revenue (AGR) payments.
Vi gets to save about Rs 1 lakh crore in total cash flows over the next four years and this, in turn, has given the company the necessary bargaining chip in its talks with global investors.
Vi’s lenders have been pushing the telco to raise funds to start clearing its upcoming financial dues starting December.

Vi’s total borrowings at Rs 23,400 crore and its annual payout toward interest on bank loans at Rs 2,600 crore. It is also staring at a Rs 6,000-crore payout toward redemption of non-convertible debentures (NCDs), starting December.
Vi needs money quickly to ramp up its 4G networks in its 16 priority markets to compete with financially stronger rivals Bharti Airtel and Reliance Jio more effectively, and to arrest subscriber losses.

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