Vodafone Idea Looking for New Funding via PE Players

Vodafone Idea is in touch with multiple Private Equity investment consortiums, including KKR and Carlyle Group, to secure around Rs. 14,000-18,000 Crores ($2-2.5 billion). The telco is looking to get the funding in convertible instruments for flexibility.

Vodafone Idea's Fundraising Efforts

The most recent efforts to raise cash won't be easy for the telco. This is because the new investors could force Vi’s co-promoters – UK’s Vodafone Plc and the Aditya Birla Group – to make some capital infusion, in order to boost their comfort levels. Additionally, the PE funds can also demand stricter covenants. These can include corporate guarantees from Vi in case of payment defaults as the debt-laden telco’s financials remain stressed and customer losses continue.

These talks are at the exploratory level at the moment as previous negotiations fell through with Oak Hill consortium.

Cash Needed for 4G/5G

Cash-strapped Vi is trying to close a sizable initial funding deal with private equity players. It hopes to achieve this via hybrid convertible instruments, comprising bonds and warrants, with a linked equity option. The initial funding will form a part of the telco’s plans to raise an overall Rs. 25,000 crore via a mix of debt and equity. This funding will find use in ramping up the 4G network, while also looking to clear some of their dues. However, co-promoter Vodafone Group has previously said it won’t infuse any fresh equity into Vi.

The third largest operator needs cash so that it has a fighting chance against Reliance Jio and Bharti Airtel, which are more financially stable. It also needs to stop the hemorrhage of subscribers and also clear statutory dues to the government. It has Rs. 50,400 crore of AGR dues payable to the government over 10 annual instalments through March 31, 2031.