The Centre has accepted Vodafone Idea’s (Vi) Rs 15,000 crore foreign direct investment (FDI) request, despite the company’s financial difficulties. The cash-strapped telecom has requested government approval for the FDI to help support its Indian operations.
According to Business Standard, the decision was made by a high-level panel that included members from the ministries of finance, home affairs, foreign affairs, and trade and industry.
The clearance will allow Vodafone Idea to raise funds to pay off some of its AGE-related obligations, reduce debts, and use the money for operating expenditures.
It claimed in a regulatory filing last September that the company’s board of directors had approved financing Rs 15,000 crore each through the issuing of stock shares in different formats and debt, with the total amount not exceeding Rs 25,000 crore.
Vodafone Idea, which had a debt of Rs 1.8 trillion as of March 31, 2021 (including deferred spectrum payment obligations of Rs 96,270 crore, AGR liability of Rs 60,960 crore, and loans of Rs 23,080 crore), had recently requested a one-year moratorium from the government to clear a spectrum instalment of over Rs 8,200 crore due in April 2022.
The board also approved the issue of “unsecured and/or secured, non-convertible debentures” in one or more tranches up to an aggregate sum of Rs 15,000 crore through a public offering or private placement.
According to official statistics, the fund-raising would provide a lifeline to cash-strapped VIL, which has been losing customers and average revenue per user (ARPU) and has outstanding AGR dues of RS 50,399.63 crore.
Ravinder Takkar, Vi’s Managing Director and CEO, announced in a statement on June 30: “We are in active discussion with potential investors for fundraising, to achieve our strategic intent.”
The firm reported a decrease of its consolidated loss to Rs 7,022.8 crore for the quarter ended March 31, 2021, in the final quarter of 2020-21.
Vodafone Idea Vi’s total revenue fell by over 19% to Rs 9,647.8 crore in the first quarter of 2019-20, compared to Rs 11,920.4 crore in the previous quarter.
As of March 31, 2021, the total debt (excluding lease liabilities) was Rs 1,80,310 crore.