Mumbai: Vodafone Idea has started exploring options to raise fresh funds after receiving relief from the government on its long-pending AGR dues. According to a Bloomberg report, the telecom company is considering raising debt from both Indian and international lenders to support its business and improve growth prospects.
The move comes soon after the government decided to cap annual payments for past AGR dues, which has provided some financial breathing space to the struggling operator.
AGR Relief Brings Temporary Comfort
Vodafone Idea recently confirmed that it has received official communication from the Department of Telecommunications regarding relief on its AGR-linked dues. Under this relief, the annual payouts for past AGR liabilities have been capped, helping ease near-term cash pressure.
However, the relief applies only to AGR dues. The company will still need to continue paying its spectrum-related dues, which remain a significant financial burden. Due to intense competition from rivals Bharti Airtel and Reliance Jio, Vodafone Idea has struggled to generate enough cash from its operations.
Debt Raising to Strengthen Network
The report said Vodafone Idea plans to use a part of the funds raised to upgrade and expand its network. Improving network quality is seen as critical for the company to retain customers and compete better with larger rivals.
To raise funds, Vodafone Idea is reaching out to a mix of domestic banks and global lenders. The company believes that the recent government relief has improved its financial outlook, making fundraising more feasible.
Stake Sale Talks Still On
Alongside debt fundraising, Vodafone Idea is also in discussions with New York-based Tillmann Global Holdings regarding a possible stake sale. While debt is currently being considered, the company has not ruled out raising equity if needed.
Market experts believe that Vodafone Idea will still require a large capital infusion despite the AGR relief. Speaking to NDTV Profit, Centrum Broking’s Piyush Pandey said that spectrum dues alone are estimated at around Rs 15,000 crore per year.
According to him, based on the company’s current cash flow, Vodafone Idea may need to raise nearly Rs 30,000 to Rs 40,000 crore in fresh funds. He also added that a tariff hike would be necessary for the company to improve its long-term financial position.
Overall, while the AGR relief has eased immediate pressure, Vodafone Idea continues to face major funding and competitive challenges.
