Vodafone Idea (Vi) has made progress towards securing the funding required for its planned network expansion, with State Bank of India (SBI) agreeing to sanction its portion of a proposed loan package.
However, the funds will be released only after the telecom operator secures the remaining financing from private-sector lenders, Bussiness Standard reported.
The development comes as Vi seeks to raise around Rs 45,000 crore over three years to support capital expenditure and strengthen its network infrastructure.
SBI Loan Approval And Lender Concerns
SBI reportedly agreed to proceed after Vodafone Idea offered guarantees from promoter-group entities, helping resolve an earlier hurdle.
However, the guarantee has reportedly come from a smaller promoter company and is being viewed primarily as an indication of promoter support rather than a strong credit guarantee.
Private-sector banks are seeking more substantial backing from larger promoter-group companies, along with letters of comfort.
Aditya Birla Group chairman Kumar Mangalam Birla is reportedly reluctant to provide such guarantees through major group entities, making the negotiations more difficult.
Vi is currently discussing funding with three groups of lenders: an SBI-led consortium of public-sector banks, private-sector banks in India and overseas lenders through external commercial borrowings.
Vi's Rs 45,000 Crore Funding Plan
The telecom operator has already raised around Rs 6,400 crore through its initial funding tranche. This includes promoter warrants as well as debt and non-funded facilities from Indian private banks and foreign lenders.
Vi has also placed orders worth approximately Rs 9,000 crore as it prepares to step up network investments.
The funding plan assumes greater importance because the Indian government owns nearly 49% of Vodafone Idea after converting the company's statutory dues into equity.
Vodafone Group holds 19%, while the Aditya Birla Group owns 6.63%, giving the two promoter groups a combined 25.64% stake.
