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

Financially stressed Vodafone Idea's (Vi) Rs 15,000 crore foreign direct investment (FDI) proposal has been approved by the Centre. The cash-strapped telco had sought the government's nod for the FDI in order to fund its operations in India. 

The decision was taken by a top-level group, including representatives from the ministries of finance, home affairs, external affairs and commerce and industry, sources told Business Standard. 

The approval would help Vodafone Idea raise funds to offload some of its dues linked to adjusted gross revenue (AGR), pare debts and utilise the money for operational expenses. 

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A Department of Telecom (DoT) official told the publication that the approval shows that the government doesn't want the telco to go bust. 

Vodafone Idea hasn't responded to queries yet, but last September, it had said in a regulatory filing that the telco's board of directors had given their nod to the proposal of raising Rs 15,000 crore each through the issue of equity shares of several forms and debt, with the cumulative amount not exceeding Rs 25,000 crore. 

However, the company couldn't go ahead with its fundraising plans.

The board approval also included the issuance of "unsecured and/or secured, non-convertible debentures" up to an aggregate amount of Rs 15,000 crore, by way of public offering or private placement basis or otherwise, in one or more tranches.

The fund-raising will throw a lifeline to cash-strapped VIL, which has suffered massive losses, as it has been losing subscribers and average revenue per user (ARPU), and faces outstanding AGR dues of Rs 50,399.63 crore as per government data.

Also Read: Vodafone Idea crisis: 'Will shut shop if we don't get relief,' says Kumar Mangalam Birla

Vi Managing Director and CEO Ravinder Takkar in a statement on June 30 had said, "We are in active discussion with potential investors for fund raising, to achieve our strategic intent."

The company in the last quarter of 2020-21 had reported narrowing of its consolidated loss to Rs 7,022.8 crore for the quarter ended March 31, 2021.

The total income of Vodafone Idea declined by about 19 per cent to Rs 9,647.8 crore from Rs 11,920.4 crore in the corresponding quarter of 2019-20.

The gross debt (excluding lease liabilities) as of March 31, 2021, stood at Rs 1,80,310 crore.