Vodafone Idea In Talks With Lenders To Refinance Rs 4,000 Crore Loans: Report

In September this year, Vodafone Idea must pay Rs 9,600 crore worth of debt to different lenders

Vi owes Rs 7,000 crore to Indus Towers alone. As of September 2022, its total debt stands at Rs 2.2 lakh crore, according to report.

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Vodafone Idea (Vi) has begun talks with banks such as State Bank of India (SBI), Punjab National Bank (PNB), and HDFC Bank to refinance a loan of about Rs 4,000 crore, citing some bankers aware of the development the Economic Times (ET) reported.

According to ET, this is expected to free up some cash for the telco, which needs to pay urgently to Indus Towers, Nokia, and Ericsson.

In September this year, Vodafone Idea must pay Rs 9,600 crore worth of debt to different lenders. It owes Rs 7,000 crore to Indus Towers alone. As of September 2022, its total debt stands at Rs 2.2 lakh crore, the publication said.

A senior banker told ET, "Vi is in fresh, preliminary talks with lenders seeking the rolling over of some bank debt, but they are yet to submit a formal refinancing proposal...discussions are also on for a softening of loan repayment terms.”

the development comes just days after the Centre allowed the telco to convert its outstanding interest payment towards adjusted gross revenue (AGR) to equity. It would make Centre Vi's largest shareholder with a 33.44 per cent stake.

Reports also stated that the company's owners, UK-based Vodafone and India's Aditya Birla Group, have committed to putting Rs 5,000 crore into the telco. This could encourage third parties to invest in the company, which needs cash urgently to compete with Reliance Jio and Bharti Airtel.

Of its total debt of Rs 2.2 lakh crore, Vi owes Rs 15,080 crore only to banks and lenders. It also needs money to upgrade the technology and move towards 5G. Around 51 per cent of its 23.1 crore subscribers are currently on 4G. The bulk is on 2G or 3G. In contrast, 100 per cent of Jio's customers are on 4G. As for Bharti Airtel, which has stopped 3G services, it already has 61.8 per cent of its customers on 4G, according to news reports.

The Average Revenue Per User (ARPU) of Vi is the lowest among its competitors at Rs 131, compared to Jio's Rs 177 and Bharti Airtel's Rs 190.