Vodafone Idea (Vi) will reconsider its decision to sell some of its assets in order to bring the much-needed cash flow in light of its Rs 1.9 lakh crore debt. Despite being in the same debt situation as before, the telecom major seems to have stalled the sale after the Centre announced the telecom relief package.
The government's package for the telecom sector includes a four-year moratorium on adjusted gross revenue- and spectrum-related dues that the company owes to the Department of Telecommunications (DoT). While the dues will have to be paid after four years with an interest of above the MBLR, the government will have an option of converting the existing debt to equity in Vodafone Idea instead.
What changed?
The package has given hope for Vodafone Idea's survival.
“We are still waiting for the finer details of the recently-announced telecom package, but it’s fair to say that most investor concerns around the future of the company have been addressed," said Vodafone Idea MD and CEO Ravinder Takkar in an interview with the Mint.
“The government has clearly indicated that it wants to ensure the viability of the industry, and I can tell that discussions with investors will be very different from what we have had in the past, irrespective of who the investor is finally," he added.
Raising capital
Vi has been trying to raise capital since 2019, but investors haven’t shown much interest or confidence in the debt-laden telecom.
The company had decided to sell off its fibre optic and data centre assets last year as a last resort to raise money.
But with a different ground situation, those plans may not be needed anymore.
“I would say that asset sales will be fairly low in the list of priorities right now, and the focus is on improving customer experience," Takkar said.
Equity infusion
Early reports suggested that the promoters of the company, Aditya Birla Group and the UK-based Vodafone Group, would likely infuse fresh equity capital into the company.
But a Vodafone Group spokesperson refuted such rumours saying that the promoter had no new equity infusion planned.
“Just to confirm our position, there will be no new equity infusion from the Vodafone Group,” a spokesperson at the Vodafone Group Plc told the Business Standard.
However, experts believe that talks of capital infusion are back on discussion, especially as the government would like to see promoters invest into the company to keep it afloat after its relief package.
(Edited by : Sandeep Singh)
First Published: Sept 23, 2021 3:07 PM IST
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