Vodafone Idea in Advanced Talks with Private Equity Funds to Raise Rs 20,000 Crore

27 Jun 2023 , 01:35 PM

Vodafone Idea Ltd (VIL) is engaged in advanced discussions with three to four private equity funds to raise approximately Rs 20,000 crore, as revealed during a recent meeting between senior officials of the Department of Telecom (DoT) and Aditya Birla Group Chairman Kumar Mangalam Birla.

The DoT officials were informed that negotiations are underway with private equity investors to secure funding for Vodafone Idea. Although no specific timeline for the capital raise was discussed, there is confidence that the company will soon regain stability, according to a top DoT official cited by Business Standard.

The official clarified that no proposals were discussed regarding further concessions on VIL’s repayment of dues to the government, such as converting a portion of the dues into equity.

The company’s dues to the DoT, a major portion of which is due in FY26, have raised concerns about the impact on Vodafone Idea in the absence of a timely capital infusion. Without adequate capital, the telco cannot embark on 5G services or expand its existing 4G services. Currently, VIL has coverage in 90% of the country, while its competitors maintain a pan-India network.

Reports have surfaced indicating that New York-based KKR and Singapore-based Temasek Holdings are among the private equity funds with which Vodafone Idea has held discussions. However, both companies have declined to comment on the matter.

Previously, potential investors faced a hurdle as they were required to wait until the government converted a portion of its dues into a 33% equity stake in the telco, making it the largest single stakeholder. The debt-to-equity conversion process, which took approximately 16 months, was completed in February 2023 when the government converted interest payments worth Rs 16,133 crore into equity. This development paved the way for talks with potential investors.

Despite the marginal reduction in debt resulting from the debt-to-equity conversion, Vodafone Idea still carries a debt burden of Rs 2.1 lakh crore.

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