voda idea share price: Vi shares fall over 1.8% at open on funding hiccups

KOLKATA: Shares of Vodafone Idea fell over 1.8 per cent at opening on Friday on the BSE. This, after an ET report about the struggling telco’s big fundraising plans hitting an air pocket amid differences with key members of the prospective lenders’ consortium such as Oak Hill Advisors and Varde Partners over funding terms and furnishing of guarantees in case of payment defaults.

Vi shares were subsequently trading 1.45 per cent lower at Rs 10.84 on the exchange in morning trade.

Though talks between the two sides have reportedly not fallen through completely, the telecom JV between UK’s Vodafone Group and Aditya Birla Group is reckoned to be already exploring other potential funding partners and is confident of securing funding by the month-end, say people aware. They added that there is surplus cash with US funds, and the Indian telecom business outlook is looking up amid surging data consumption growth, post-pandemic.

The exclusivity period for talks between the group of potential lenders consisting of Oak Hill, Pacific Investment Management Co, Sixth Street, Twin Point Capital and Varde Partners and Vodafone Idea ended February 28, without any deal. Of the original members of the consortium, GoldenTree has already exited.

The original deadline for exclusive talks was January 31, which was extended by a month.

Over the past few months, Vi has been in talks with the Oak Hill-led consortium to finalise the terms of a $2 billion (Rs 15,000 crore approx) credit line via hybrid convertible funding instruments, comprising bonds and warrants. The credit line, which was to be used to expand the carrier’s 4G network, was meant to be a part of the overall Rs 25,000 crore that Vi plans to raise via a mix of debt and equity.

But the operator has been struggling to turn around its financials and has been unable to stop customer losses. In the October-December quarter, the telco’s revenue rose less than 1 per cent on quarter, compared with Airtel’s nearly 7 per cent and Jio’s 6 per cent growth. Its average revenue per user at December end was at Rs121, lagging Airtel’s Rs 166 and Jio’s Rs 151.

Goldman Sachs said in a report that the telco “has very limited liquidity available”. The company had cash of Rs200 crore at December end. Its Ebitda is expected at Rs1,800 crore in the March quarter when it needs to pay some Rs 500 crore as bank interest and Rs 700 crore as upfront payment for the spectrum it bought in the just ended auctions.

Despite limited participation in the recent airwave sale, Vi’s annual spectrum payment obligation to the government will be at Rs 14,100 crore starting FY23, the highest among the Big 3 telcos, the global brokerage said.