Debt-laden telecom operator Vodafone Idea will hold a board meeting on Friday, October 21, to consider and evaluate the proposal for raising funds as it struggles with its debt repayments. During its board meeting, the board will consider the proposal to issue convertible debentures to a vendor.
A convertible debenture is a form of long-term debt where the debentures can be converted into equity after a specific period. Usually, there is no collateral that backs up the debt.
As of the June quarter, Vodafone Idea's overall debt stood at Rs 1.98 lakh crore. Last month, Indus Towers had warned the company of service closure over non-payment of dues, CNBC-TV18 reported on September 29, citing sources. The board had expressed concerns over mounting dues from Vi, which amounted to as high as Rs 7,000 crore.
A day later, Vodafone Idea said saying that it is in talks with Indus Towers over clearing pending dues. The company said it is in discussion for softer payment terms, which have not concluded yet.
On the other hand, uncertainty also looms over whether the government will convert the current spectrum dues into equity. That conversion has been pending since January this year. There is no clarity over promoters infusing further cash in the company, without which the government is reluctant to convert its spectrum dues into equity.
In September, the company decided that it will not convert its deferred Adjusted Gross Revenue (AGR) into equity for the financial years 2017-2018 and 2018-2019.
Vodafone Idea is also struggling to put out a timeline for its 5G services launch. While peers like Reliance Jio and Bharti Airtel laid out specific timelines of their own, Aditya Birla Group chairperson Kumar Mangalam Birla said the company would begin 5G services "soon" without specifying the exact timeline.
For August, Vodafone Idea lost another 19.6 lakh subscribers, while Reliance Jio added the most subscribers for the fifth straight month, with 32.8 lakh additions.
Shares of Vodafone Idea are down 45 percent this year and continue to trade below levels of Rs 10.
Also Read: 5G Is Here: When will you, the customer, get it and how long can Vodafone Idea users wait
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