Vodafone Idea's promoters may infuse Rs 2,000 crore in company

Vodafone Idea’s promoters are likely to invest around Rs 2,000 crore into the company, sources said. The decision comes within weeks of the government surfacing as the largest shareholder of the telecom company after consenting to convert outstanding interest on pending statutory payments into equity.

The investment may be followed by another promoter funding round, apart from a much larger debt raise, sources added. It is likely to be used for purchase of 5G telecom gear as Voda Idea has not yet  proceeded with deployment of the high-speed network even as Reliance Jio and Airtel have started offering consumer services.

“We have been informed that the promoters plan to infuse Rs 2,000 crore into Vodafone Idea, and this will primarily be used for kick-starting 5G plans. We are hoping that this decision will build up confidence of the wider investment community in the company so that it is able to garner more funds, including through debt,” one of the sources told.

The promoters of the company Aditya Birla group and UK’s Vodafone Plc had previously invested Rs 5,000 crore in Vodafone Idea. The government had given a big relief to Vodafone Idea after it agreed to pick up around 33% stake in the company in spite of the interest payout amounting to Rs 16,133 crore for delayed statutory payments.

The source said the promoters had assured the government that they will make fresh investments into the company to build up investor confidence and show commitment towards working out a credible turnaround plan. Vodafone Idea, however, is yet to show any credible turnaround in operations. Its loss widen to Rs 7,990 crore against Rs 7,595 crore in preceding quarter.

ARPU (average revenue per user), a key metric to measure health of telecom companies, stood at Rs 135 against Rs 131 in the second quarter. However, it was way below ARPU of rivals, such as, Airtel (Rs 193) in Q3 and Jio’s Rs 178.

The gross debt (excluding lease liabilities and including interest accrued but not due) as of 2022 stood at Rs 2.2 lakh crore, comprising deferred spectrum payment obligations of Rs 1.4 lakh crore, AGR liability of Rs 69,900 crore that are due to the government, and debt from banks and financial institutions of Rs 13,190 crore.