Mumbai: Vodafone Idea Ltd (Vi) has reportedly secured approval for around $3.5 billion in debt financing from a consortium of Indian lenders led by State Bank of India (SBI), providing the telecom operator with fresh financial firepower to strengthen its network and revive its business.
Union Bank of India and the National Bank for Financing Infrastructure and Development are also part of the lending group, according to people familiar with the development.
The companies and lenders have not publicly confirmed the financing arrangement.
Funds to Strengthen Vi Network
Vodafone Idea, India's third-largest wireless operator by subscribers, is expected to deploy part of the funds towards network expansion and improvement.
The investment could help Vi strengthen its competitive position against larger rivals Bharti Airtel and Reliance Jio Infocomm.
The telecom operator has been working to raise debt for several months as it seeks to improve its financial position and fund investments required to upgrade its network.
Loan Comes With Key Conditions
The proposed Vodafone Idea loan reportedly carries a tenure of nearly 10 years.
One of the conditions requires billionaire Kumar Mangalam Birla to continue as Vodafone Idea chairman throughout the loan period. The financing arrangement also includes repayment guarantees in the event of a default, according to the report.
Government Measures Support Vodafone Idea
Vodafone Idea's fundraising efforts come after government measures provided significant financial relief to the debt-laden telecom company.
Earlier this year, authorities capped certain past spectrum payment obligations, improving the company's prospects of attracting fresh capital.
The government had also converted about Rs37,000 crore of outstanding dues into equity last year, increasing its stake in Vodafone Idea to 48.99% from 22.6%.
Vi reported a quarterly loss of Rs3,750 crore for the three months ended June, narrower than expected.
Improved sentiment around the company's turnaround has supported Vodafone Idea shares, which have gained nearly 40% this year, taking its market capitalisation to around Rs1.6 lakh crore.
