Vodafone Idea To Raise ₹1,600 Crore From ATC To Pay Tower Rentals

Vodafone Idea board approved to raise ₹1,600 crore by issuing equity convertible bonds from ATC to repay tower companies dues as tower rentals.

The board of directors of Vodafone Idea Ltd authorized a plan on Friday to issue 1,600 crore in convertible bonds to ATC Telecom Infrastructure. 

Vodafone Idea will use the money to settle some outstanding debts with the tower operator for the use of its assets to deliver services for mobile phones in India.

The telco announced that it would issue 16,000 10-lakh optionally convertible, unrated, unlisted, and unsecured bonds in one or more tranches.

The bonds will have an 18-month term with a semi-annual coupon payment of 11.2% and be convertible into shares for a price of 10 per share.

According to Vodafone Idea, “the funds raised will be used for general corporate purposes and to pay amounts due to ATC under the master lease agreements.”

Additionally, it stated that there would be a number of requirements for the preferential sale of the debentures, including shareholders ’ confirmation and the government converting interest from the deferral of the company’s spectrum dues and adjusted gross revenue into equity.

According to those familiar with the situation, Vodafone Idea owes up to 3,000 crore to ATC and an added 7,000 crore to Indus Towers, the largest tower provider in the world.

Following reports that the tower provider might revoke services if its dues were not paid, Vodafone Idea requested softer payment terms from Indus Towers, including more time and partial payment of its unpaid balance.

Industry insiders claimed that the decision to pay ATC would give breathing room to the loss-making telecommunication company, which has debts totaling more than 1.9 trillion rupees and is unable to raise 20,000 crore via equity or debt from outside investors.

In order to compete in the Indian market, where rivals like Bharti Airtel and Reliance Jio have placed out aggressive plans for launching 5G services, Vodafone Idea, which provides more than 260 million cellphone phone subscribers, needs funding.

Vodafone Idea has not yet finalized the contracts with the vendors for the telecom equipment needed to deploy 5G networks, unlike the top 2 telecom companies.

Akshaya Moondra, the CEO of Vodafone Idea, stated at the company’s 27th annual general meeting last month that negotiations were ongoing with a number of vendors for the purchase of 5G (equipment) as well as with banks for financing plans. He had stated that once these two elements were in place, 5G deployment will begin.