Having missed the self-imposed December 31 deadline for finding new investors, Vodafone Idea is facing pushback from lenders who are refusing to extend fresh loans to the telcom operator.

“Without promoters bringing in fresh capital into the company we have taken a call to abstain from taking fresh exposure in the operator. A few months back, there was an expectation that there would be some development with respect to fresh funding, but nothing seems to be materialising,” a senior banking official told businessline.

Other bankers businessline spoke to had similar feedback when asked if they are willing to lend afresh to the telecom company. While bankers are comfortable with VIL’s asset quality position for now, they believe that it is unwise to increase their exposure to the company, given its financials and business operations aren’t sustainable for the long haul.

While the Central Government gave the telecoms firm a lifeline in terms of a moratorium on certain spectrum and license fee payments, in addition to taking on certain debt of the firm as 33 per cent equity in the company, the expectation was that Vi will be able to raise fresh capital from external investors. 

Vi went back to the lenders with fresh business plans after the government finally converted its debt to equity in February this year. Investors were hoping that some sort of funding would come through soon. Akshay Moondra, Vodafone Idea CEO also alluded to the fact that they hope to raise some funds in or atleast conclude talks for raising equity in the October December quarter.

With no fundraising in the horizon, Vi was using fresh credit or new loans of the banks to pay back new payments on spectrum, license fee and interest on its gargantuan debt in a piecemeal manner.

Reacting to the lenders’ sentiments a telecom expert said, “Vi will be in trouble since it won’t be able to refinance debt.  However, I doubt the government will let this happen. They will nudge SBI to extend credit.”

Institutional investor, Shriram Subramaniam, Founder and MD of InGovern Research services added, “For the company to survive, the sooner the firm declares bankruptcy the better it is. Most of new funds raised by Vi are going into service the huge loans. It is better that the banks take a hit and write off debt, since there is little hope of recovery.”

To make matters worse, the new Telecommunications Act, 2023 has removed an earlier proposed bailout plan for financially weak telecom operators. The previous edition of the bill contained waiver provisions that could waive off or defer dues.

However there are market rumours that Vi could find a backer in American billionaire Elon Musk who is expected to enter India’s broadband market through satellite services. Vodafone Idea stocks zoomed by 25 per cent last Friday based on these speculations.

When contacted a spokesperson for Vi said that discussions with potential investors are underway but refused to disclose any other details or set a fresh deadline.

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