Noida, May 4 (APAC Media): Vodafone Idea is in talks to raise about Rs 25,000 crore in debt from a consortium of lenders led by State Bank of India, in a move that could significantly strengthen the struggling telecom operator’s financial position following recent relief on adjusted gross revenue (AGR) dues.
The Department of Telecommunications on Thursday cut Vodafone Idea’s adjusted gross revenue (AGR) liabilities to Rs 64,046 crore from Rs 87,695 crore earlier, providing significant cash-flow relief.
The final liability will be payable in a structured manner, with a minimum of Rs 100 crore to be paid annually over four years from FY 2031–32 to FY 2034–35. The remaining outstanding amount will then be cleared in six equal annual instalments spread across FY 2035–36 to FY 2040–41, providing a long repayment window for Vodafone Idea to manage its cash flows.
Sources familiar with the matter said discussions have accelerated following the government’s move to cut the company’s AGR liabilities, easing a significant financial overhang that had previously hindered fundraising.
The relief has strengthened the firm’s credit profile, leading lenders to re-evaluate its repayment capacity and longer-term viability.
Vodafone Idea, burdened with billions in debt and intense competition, has been seeking fresh capital to fund network expansion and retain subscribers. Bankers were earlier reluctant to extend large loans due to concerns over the company’s high leverage and uncertain cash flows.
However, the recalibration of AGR dues has renewed optimism among lenders.
According to people aware of the discussions, the proposed funding would be primarily used for capital expenditure, including strengthening 4G infrastructure and initiating rollout plans for 5G services.
The company is also expected to seek additional working capital support as part of its broader revival strategy.
This, in turn, enhances its ability to secure external funding and invest in network improvements, which are critical to competing with larger rivals.
The company continues to lose market share in a highly competitive telecom industry dominated by stronger rivals. It also faces significant ongoing liabilities, including spectrum payment obligations and substantial operational expenses, which continue to weigh on its financial flexibility and long-term recovery prospects.
Industry experts caution that while the proposed SBI-led funding could provide short-term liquidity support, sustained recovery will depend on the company’s ability to improve revenues, expand its subscriber base, and execute its capital expenditure plans effectively.
If successful, the fundraising would mark a crucial step in Vodafone Idea’s efforts to stabilize operations and position itself for long-term growth in India’s rapidly evolving telecom market.
Source: ET
Disclaimer:Â Views expressed are those of experts and do not reflect APAC Media. This is for informational purposes only, not financial advice. We are not responsible for investment decisions. Please consult a qualified financial advisor before investing.
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