News

Vodafone Idea, India’s third-largest telco by customers, has raised ₹3,300 crore through secured non-convertible debentures, or NCDs — less than a fresh lease of life was thrown at the financially-stressed company by the Supreme Court. The NCDs are unlisted and unrated, the company said in a statement.

The telco is just coming out of a tough period after pending dues to the central government mounted to ₹2 trillion and the company risked going into bankruptcy. The dues are under review after a late October Supreme Court order.

The fundraise was through Vodafone Idea Telecom Infrastructure Ltd, or VITIL, a subsidiary of Vodafone Idea.The proceeds from this issuance will be utilized by VITIL to repay past obligations to Vodafone Idea enabling the telco to bolster its capital expenditure and support business growth.

Interest in the fundraise from large non-banking financial companies, foreign portfolio investors, and alternative investment funds, exceeded the NCD issuance, Vodafone Idea added.

This fund raise sets off a fresh capital expenditure cycle at the beleaguered company, CEO Abhijit Kishore signalled in the statement: “This capital strengthens our momentum as we continue to scale our network and enhance services for our customers. Discussions relating to long-term debt raise to support capex are ongoing with banks.”

JM Financial Products Ltd acted as the exclusive debt Arranger in the fundraise.

An expert said the NCDs issue showed a credit upgrade of the company. "One thing that is very relevant as a marker for Vodafone Idea's progress is the credit upgrade. Prior to the government's conversion of its spectrum dues (worth ₹36,950 crore in April) into equity, its debt was junk rated. Now it is an investment grade," said Vivekanand Subbaraman, lead analyst for telecom and media at Ambit Capital. The conditions are right for banks to lend money to the company after the government acts on its dues.

The government is currently reassessing Vodafone Idea's adjusted gross revenue (AGR) dues . Yet, the company’s overall survival hinges on the final relief it gets and its ability to raise debt to finance its network rollout and operations.

AGR represents the income calculated from telecom operators’ total revenues, serving as the basis for regulatory fee payments.

Of the ₹2 trillion dues, the AGR dues of Vodafone Idea alone stands at ₹78,500 crore as on September end. The remaining is mostly the amount that the company owes the government for wireless spectrum purchased in auctions.

Analysts have flagged the monstrous size of the dues and said the company's future depends on the waivers it can finally get from the government. Brokerage Emkay Global Financial Services, for instance, has noted that that restructuring of spectrum and AGR dues are critical for long-term sustainability of the company.

“We note that of the total debt of Rs1.96 trillion, Rs0.76 trillion pertains to AGR liabilities and Rs1.18trn pertains to spectrum debt (as of Mar-25),” it wrote in a 11 November report. With this, leverage remains high even without AGR dues, and the government will have to consider a plan.

With 196.7 million customers, Vodafone Idea is significantly behind the subscriber base at Reliance Jio and Bharti Airtel. Jio has 506 million customers and Airtel 364 million.

Vodafone Idea had earlier said it was engaged with lenders to secure debt financing to support its capex plans of up to ₹55,000 crore. In August, the company announced that it had begun exploring non-banking sources of funding to maintain the continuity of its critical capital expenditure cycle.

In the current financial year, the company is looking to spend in the range of ₹7,500-8,000 crore in capex, Kishore had said in a recent earnings call. In the first half of the current financial year, the company already spent of ₹4,200 crore to improve coverage of 4G networks and the rollout of 5G ones.

“We are not really looking for external funding for this particular capex. It is part of the internal accrual as well as the money that we have," Kishore had said, adding that the focus of the current spending is primarily towards coverage split between 4G and 5G.

The telco posted a net loss of ₹5,524 crore, lower than the year-ago loss of ₹7,176 crore in the September quarter. Its revenue from operations increased 2.4% on-year and 1.6% sequentially to ₹11,194.7 crore.

The company’s average revenue per user (ARPU), a key performance metric among telcos, rose marginally to ₹167 in the latest quarter from ₹165 in the April-June quarter. In comparison, Reliance Jio’s ARPU stood at ₹211.4 and Airtel’s ₹256 in the September quarter.

Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

Download the Mint app and read premium stories

Log in to our website to save your bookmarks. It'll just take a moment.

Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.