Debt-laden Vodafone Idea plans asset sale to raise USD 1 billion

Debt-ridden telecom operator Vodafone Idea expects to raise Rs 7400 crore from sale of assets to meet its upcoming liabilities. The telecom giant is planning to generate cash through sale of its fixed-line broadband subsidiary, optic fibre unit and data centres business, The Economic Times reported. The telco will use the proceeds to pay bills worth Rs 22,500 crore between December 2021 and April 2022. This amount constitutes a mix of regular debt, adjusted gross revenue and spectrum dues. Its cash balance stood at Rs 350 crore on March 31 and loss was Rs 6,985.1 crore for the March quarter.

In a recent SOS to the Telecom Department, the troubled operator had said it will be “unable to pay the instalment of Rs 8,292 crore due on April 9, 2022” and sought deferment of spectrum by a year. t said that its operations were not generating enough cash and its efforts to raise Rs 25,000 crore were cut due to the industry’s ‘below cost’ tariffs.

The gross debt (excluding lease liabilities) as of March 31, 2021 stood at Rs 1,80,310 crore. This comprised deferred spectrum payment obligations of Rs 96,270 crore, AGR (adjusted gross revenue) liability of Rs 60,960 crore and debt from banks and financial institutions of Rs 23,080 crore.

Speaking at analyst call post Q4 earnings announcement, Ravinder Takkar, CEO of Vodafone Idea said, “On fund raising, we are currently in active discussion with potential investors.”

Takkar did not give a firm timeline for fund raising – which has been significantly delayed – but emphasised that the company is fully engaged with investors and “interest” continues.

Last week, Bharti Airtel Chairman Sunil Mittal said that telecom industry is under tremendous stress underlining the need for hike in tariffs.

“To say telecom industry is in a bit of trouble is actually an understatement. It is in a tremendous amount of stress. I hope the Government, the authorities, and telecom department…all…focus on this issue and ensure India”s digital dream remains intact through the provision of at least three operators,” Mittal noted.

Also Read: Telecom industry under tremendous stress; tariffs need to go up: Sunil Mittal

The comments by the telecom czar came at a time when Airtel’s rival Vodafone Idea has approached the government for a one-year moratorium on payment of spectrum instalment of over Rs 8,200 crore – due in April 2022.