Vodafone Idea has received in-principle approval for ₹14,000 crore from a consortium of banks led by the State Bank of India. Sources in the know told businessline that a consortium of various PSU banks and two major private sector banks has given in-principle approval of these funds.

Earlier in the year, Vodafone Idea told its shareholders that it will be raising ₹25,000 crore of additional funds from lenders. Vodafone has also raised ₹18,000 crore in a successful follow on public offer (FPO) that took place in April. 

A highly-placed source told businessline that the funding has been extended on a tight covenants as well as being priced for potential risks. Which means interest rates on the credit issued is anywhere between 100-150 basis points higher than what is usually typical for these loans.

These funds will largely be used for the telco’s 5G rollout. In its red herring prospectus during the FPO, Vodafone Idea had noted that any funds raised from the FPO as well as from lenders and promoters will be used for network expansion, while impeding dues would be cleared from revenues that the telco generates. 

This deal largely in the pipeline right after Vodafone Idea announced a successful FPO. On May 17, Akshay Moondra had told investors that banks were awaiting equity fundraise before extending credit. 

“...We’ve been engaged with the banks for a long time, and it was their ask that first the equity raise should be completed, so we’ve done that. We have started engagement with the banks again…we have some capital available, and we’ll be able to close the discussions with the banks in good time,” Moondra said during the earnings call.

Vi has reduced its overall bank debt from the peak level of ₹40,000 crore to around ₹4,000 crore currently and the company has asked lenders to release funds commensurate with the equity infusion through its ₹18,000 crore follow-on public offering (FPO) in April this year. The FPO was oversubscribed more than six times and drew investors such as GQG Partners and Citigroup Global.

On May 8, Vi’s shareholders approved an equity infusion of ₹2,075 crore on a preferential basis from an Aditya Birla Group (ABG) entity. This, coupled with the preferential equity raise of ₹494 crore in 2022 from Vodafone Group and ABG takes the total fund infusion by both the promoter groups to ₹7,000 crore between March 2022 and May 2024.

Vodafone Idea did not reply to our official query at the time of filing the report. 

SBI clarifies

In a statement released to businessline on June 12, 2024, SBI said: “SBI or any consortium with SBI as the lead Bank has not accorded any approval whatsoever to the... company”.

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