AGR judgement: Bankers expect Vodafone Idea to beef up its fundraising efforts

The public and the private sector lenders to Vodafone Idea expect the debt-laden company to beef up its fundraising efforts from the market.

The company already has a board-approved proposal to raise Rs 25,000 crore since September last year. There were some talks of interest by Apollo Global, which was keen to invest $3 billion, but nothing has materialised as yet. "Investors could be waiting for the Supreme Court judgement because of its material impact on the company's financials," say bankers.

The Supreme Court today has set aside the request by telecom players like Bharti and Vodafone for arithmetic errors, which could have been a big breather in case of a favourable judgment. The telecom companies had pointed out arithmetic errors in the DoT’s calculation of the Adjusted Gross Revenue or AGR dues and requested the court for a correction.

Also read: AGR case: Setback for Bharti Airtel, Vodafone Idea, Tata Teleservices; SC dismisses all pleas

Early this month, Ravinder Thakkar, MD& CEO of Vodafone had said that the company is in discussion with investors and there is a continued interest in investing in the telecom sector in the country. "I think the biggest hurdle if you ask me, is that the overall industry is under stress because of the pricing situation. As soon as the pricing improves, it will create a significant amount of confidence, not only in the industry players but overall will start to show positive returns for the industry."

"I think that (pricing) is really what can provide a significant amount of confidence and new investments, not only from new investors but also from existing investors into the business," he said without speculating on the timeframe of raising resources.  

Thakkar was upbeat about a favourable judgment from the supreme court. According to reports, Vodafone Idea’s Rs 15,000 crore proposal for investment through the foreign direct investment or FDI route was approved by the government. 

Also read: Vodafone Idea gets Centre's nod for Rs 15,000 cr FDI

The banks and debenture holders, and other liabilities of the company, are at a staggering level of Rs 1, 86,779 crores for the year ending March 2021. This is the total debt in the books of the company, which also includes interest accrued but not due and AGR liability.   

In the just-completed financial year, the company’s total income was at Rs 41,931 crore and a net loss of Rs 46,293 crore. The interest burden alone was Rs 17,991 crore on a stand-alone basis. So far, the company has been paying its dues to the banks regularly.

The bankers' main worry is the non-fund-based guarantees that have been given on behalf of the company. While the lenders are insisting on higher interest rates, margins, and additional funds from the promoters because of consistent losses and downgrades by rating agencies, the company is requesting banks for relaxation in collateral requirements to raise additional funds from the market.  

The equity route to raise money will also result in equity dilution as the share price is too low and the equity has expanded to Rs 28,735 crore.The monetization of assets is yet another route to raise additional resources. There was news of the company putting on the block the data centre business and its land, which is under an unlisted subsidiary. However, the company has not specified any assets for monetization.

Also read: Fresh survival troubles for Vodafone Idea after the Supreme Court order