Cash-Strapped Vodafone Idea Attempts For ₹23,000 Crore Loan

Vodafone Idea (Vi) has asked banks for an extra Rs 10,000 crore in bank guarantees in addition to proposing to borrow Rs 23,000 crore in term loans, The Economic Times reported.

The action is part of the third-largest player in India's attempt to raise the necessary funds to compete in the telecom market, which once threatened to become a duopoly, against its larger rivals, Reliance Jio and Airtel.

According to the report, a few days ago, Vodafone Plc and Aditya Birla Group joint venture presented the term loan proposal at a meeting of a banking consortium headed by State Bank of India (SBI).

The joint venture has fulfilled the long-standing requests of the lenders to increase their equity contribution to the company.

Deployment of funds

The loans that are being requested are part of the capital expenditures of Rs 55,000 crore that Vi is attempting to raise in order to start greenfield 5G rollouts in strategic markets and increase 4G coverage.

In its presentation to lenders, Vi stated that it needed the money to upgrade the mobile broadband network's infrastructure in 17 important areas, according to the report.

Before deciding whether to approve the loan, banks will now request a technoeconomic viability (TEV) report from a reputable consulting firm to evaluate Vi's creditworthiness, according to the report.

"Vi has now made formal bank approaches. According to the ET report, the presentation essentially detailed the organization's future plans, including infrastructure upgrades. "Banks moved to a TEV (Total Enterprise Valuation), which will take a few months after taking notice of it."

An evaluation of a company's risks concerning technology, markets, finances, and regulations is typically the focus of a TEV analysis. It helps banks take possible risks into account when extending large loans to a business.

Previous Borrowings

Vi met a critical condition for providing fresh loans to the company by sharing a detailed debt-raising plan with several lenders just days after obtaining nearly Rs 24,000 crore.

Over the past few months, Vi's management has been in talks with a number of banks to borrow up to Rs 25,000 crore through debt and additional non-fund-based facilities of Rs 10,000 crore. According to the report.