Vodafone, ABG may Infuse Fresh Equity into Vodafone Idea

Vodafone Plc and Aditya Birla Group are considering all options to ensure that Vodafone Idea's future is secure. As such, this might include putting in some fresh equity into the telco to further build on the recent relief package. To potential investors, this will spell out the co-promoters' willingness to secure the telco's future.

Vodafone Idea can get Equity from Promoters

People close to the Indian co-promoted said that no decision has been reached yet, however, "the pros and cons of a fresh capital infusion are back on the discussion table". Notably, Vi's lenders and investors want the co-promoters to inject some capital in the telco.

After the 15th September telecom relief package, the co-promoters are under more pressure from the lenders and investors to show their willingness to support the telco. Incidentally, it seems like Vi's co-promoters have already committed to reviving the operator to the government.

A person close to a potential US PE investor told ET, "it's time Vi's promoters infuse some capital and signal their intent to rebuild the company to complement the relief package...such a move would also give potential overseas PE investors the confidence to participate and close Vi's long pending fundraise that would also help it clear its upcoming financial dues".

Will They, Won't They?

Till date, Vodafone UK and ABG have stuck to their stance of not committing any fresh equity. Right now, Vodafone Plc owns 44.39% in Vi while ABG holds 27.66%. However, the possible change of heart comes in the wake of the government's detailed telecom relief package.

The reforms will give the telco a potential cash flow relief of just over Rs. 1 trillion. The telco has been widely tipped to go for the deferred payments, given its Rs. 1.91 trillion of debt and a cash balance of just Rs 920 crore.