Chairman of Aditya Birla Group–Kumar Mangalam Birla, may invest a token amount less than 1,000 crore in Vodafone Idea as a response to the Centre’s reform package aimed primarily at reviving the struggling telecom sector.
“Much of the funds will have to come in from external sources. KM Birla will put in some money, but not a significant sum while Vodafone is unlikely to pump in more money (from the UK group). Monetising the assets in Indus is really the plan,” a top official close to the Vodafone Group told Economic Times, a leading financial daily.
“Clearly, investors want both the promoters to put their money where their mouth is. It is only after that that external fund-raising will happen,” the official added.
Because of its poor financial position and uncertainty about whether the Centre will announce steps to aid the cash-strapped telecom, the company has attempted unsuccessfully to raise capital from outside investors over the last year. In September 2020, Vodafone Idea revealed an intention to fund at least 25,000 crore.
British multinational telecommunications company–Vodafone Group has 45% of the stake in Vodafone Idea, while the Indian promoter group, which includes Kumar Mangalam Birla and Aditya Birla Group firms, owns only 26%.
Vodafone Idea has a current valuation of ₹31,000 crore. The telecommunication company has to repay ₹9,000 crore of loans to banks before this fiscal year ends, it also includes ₹5,000 crore of non-convertible debentures.
Vodafone’s gross liabilities, including regulatory dues, was around ₹1.9 trillion as of 31 March.
A total of ₹48,000 crore is what the telco owes to eight banks, led by the State Bank of India.
Vodafone Idea’s yearly loan payments are expected to be over 6,000 crore over the next two years, according to bankers. Furthermore, after the four-year holiday period ends, payments to lenders and the government are expected to skyrocket.
According to a 16 September Nomura note to investors, Vodafone Idea’s yearly dues repayment would climb from 24,800 crore to 43,000 crore after the four-year payments moratorium ends, while dues to the Centre will likely expand from 1.6 trillion in FY21 to 2.2 trillion after the moratorium ends.
Birla stepped down as chairman of Vodafone Idea Ltd and previous to this has sought Central Government’s support and also gave a thought of giving up his stake in the telecom operator.
Post-March 2016, or since Reliance Jio had entered into the market, the VI faced stiff competition and posting losses in the topline.