Vodafone Idea Approaches Banks For ₹ 7,000 Crore Loans

Vodafone-Idea (Vi) has approached banks for ₹7,000 crore emergency loan to pay Indus Towers. Currently, the shares of Vi are 1.14% down.

State Bank of India, Punjab National Bank, HDFC Bank, and IDFC First are just a few of the lenders that Vodafone Idea (Vi) has contacted in order to secure loans totaling more than Rs 7,000 crore. 

Three persons with knowledge of the situation claimed that the majority of the loans will be utilized to pay off some of the company’s debts to Indus Towers.

A senior bank official told ET, “Yes, Vi has sought us for a loan, but we haven’t promised anything to them; it’s at a logjam.

Lenders wanted clarification on the government’s potential ownership stake in the telco, promoters’ plans to inject cash to boost investor confidence, and company expansion.

Vi has instructed them to throw in Rs 15,000 crore in bank guarantees and issue new loans, according to a representative of another lender.

As part of a sector-revival plan, the government returned the bank guarantees last year.

Vi, which is jointly sponsored by India’s Aditya Birla Group (ABG) and the UK’s Vodafone Plc, needs the money right now because its debt to Indus has grown to about Rs 7,500 crore. 

It has promised to pay the tower business 100% of its ongoing obligations beginning in January and to pay off the remaining balance owing as of December 31, 2022, over the course of seven months, beginning this month.

According to a person with knowledge of the situation, Vodafone Idea owes the tower company monthly payments of between Rs 250 and Rs 300 crore.

Vi was earlier given a warning by Indus that access to tower sites would be cut off if its payments weren’t paid. Later, the telco made the loan repayment proposal, which the tower business approved.

As of the time of publication, ET had not heard back from Vi or ABG. Vodafone and Indus from the UK declined to comment. SBI, PNB, HDFC Bank, and IDFC First did not respond to inquiries.

The banking industry cannot lend money to a business with a negative net value, according to one of the authorities cited previously, and there is no assurance that the loans would be returned. As of the end of September in FY23, Vi had a negative net worth of Rs 75,830.8 crore.

The company had previously requested a loan from SBI in the amount of Rs 16,000 crore, but it hasn’t yet been approved.