Vodafone Idea has reportedly begun discussions with Indian banks and other lenders including State Bank of India, Punjab National Bank, and HDFC Bank to refinance loans amounting between Rs 3,000 and Rs 4,000 crore.
The move is aimed at freeing up funds for the company, which it needs to pay urgently to Indus Towers, Nokia, and Ericsson. The company has a debt obligation of Rs 9,600 crore to be paid to various lenders in September, with Rs 7,000 crore owed to Indus Towers alone. As of September 2022, the total debt of Vodafone Idea stands at Rs 2.2 trillion.
The news about the talks comes only a few days after the center permitted the telco to convert its unpaid interest charge toward adjusted gross revenue (AGR) and equity. With a 33.44% stake, it would become Center Vi's largest shareholder.
Reportedly, the company's owners, the Aditya Birla Group of India and Vodafone UK, have agreed to invest Rs 5,000 crore in the telco. As a result, other parties could be more inclined to invest in the business, which desperately needs capital to fight with Reliance Jio and Bharti Airtel.
The company currently owes banks and lenders Rs 15,080 crore out of its total debt of Rs 2.2 trillion. To upgrade its technology and make the transition to 5G, the company requires additional funding. Currently, 51% of its 231 million subscribers are on 4G, with others still using 2G or 3G. In contrast, 100% of Jio's customers are on 4G, while Bharti Airtel, which has already discontinued 3G services, has 61.8% of its customers on 4G.
The company's average revenue per user (ARPU) of Rs 131 is the lowest among its competitors, compared to Jio's ARPU of Rs. 177 and Bharti Airtel's ARPU of Rs 190.