Debt funding delay to slow Vodafone idea’s turnaround and government relief likely
Debt-ridden telecom firm Vodafone-Idea (VI) may face a delay in its Rs 25,000-crore debt financing plan. However, according to analysts, the company could benefit from relief from the government, which would make it possible to convert a large part of its statutory outstandings into equity.
Analysts believe this could slow down the telecom operator’s financial recovery. The company’s management acknowledged potential delays in securing debt financing last week.
In fact, the Supreme Court had rejected the company’s AGR (Adjusted Gross Revenue) curative petition. Previously, the company had expressed hope of obtaining the bank loan by the end of November.
Vodafone-Idea says lenders have adopted a wait-and-see strategy regarding its debt financing plan. Talks with the lenders were progressing rapidly until the company’s curative AGR application was rejected, but after the application was rejected, the lenders suspended their decision.
Behind Jio and Airtel in terms of network settings
Ashvinder Sethi, partner at Analysis Mason, said, “The capital expenditure target of Rs 50,000-55,000 is very important for VI as it lags behind Reliance Jio and Airtel in terms of many network parameters such as the number of sites, the percentage of 4G sites, Launch of 5G. “The delay in debt financing will impact Vodafone’s ability to achieve financial recovery,” it said.
Vodafone management says the telco and its promoters are in talks with lenders to secure a loan to fund capital expenditure as part of the network expansion plan for the next three years.
Capital expenditure will mainly focus on 4G coverage, capacity expansion and 5G service. IIFL Securities said the debt increase is important to implement Vodafone’s capital expenditure plan.
Vodafone-Idea shares have fallen 50% this year
VI shares closed at Rs 7.10 today (Tuesday, November 19) after a decline of 2.07 per cent. The company’s stock fell 16.47% in one month, 47.60% in 6 months and 50% in one year. The market capitalization of the company is Rs 49.56 thousand crore.
VI losses of ₹7,176 crore in second quarter
Vodafone-Idea suffered a consolidated loss of Rs 7,176 crore in the second quarter of FY2025. The company had incurred a loss of Rs 8,746 crore in the same quarter a year ago. VI losses decreased by 18% year-on-year.
During the July-September quarter, Vodafone-Idea’s consolidated operating revenue grew 2.01 per cent year-on-year to Rs 10,932 crore. The company’s revenue in the same quarter a year ago was Rs 10,716 crore.