Debt-laden Vodafone Idea is considering diluting its equity stake to one of its network vendors, according to the telecom operator’s stock exchange filing on Wednesday. The company informed that a meeting of the Board of Directors of the Company is scheduled for Friday– October 21, 2022, to consider and evaluate a proposal for issuance of debenture securities convertible into equity shares on a preferential/private placement basis to a vendor. 

Dues to equity option

The telecom operator has not disclosed which vendor it will be issuing equity to. Currently, vendors — Nokia, Huawei, ZTE, tower company Indus Towers, Cisco and HP — enable the operator’s telecom network. Vodafone Idea, which is struggling to raise funds for the upcoming launch of 5G services, has been encountering difficulties in paying dues to some of these vendors who are currently operating its 4G and 2G network. This is likely why the company is exploring the option to convert these dues to equity. Meanwhile, the company’s goal to raise ₹20,000 crore as a mixture of debt and equity remains unfulfilled.

In May, the then CEO Ravinder Takkar noted that the company was on the verge of closing a significant round of fundraising, intending to raise ₹10,000 crore through equity and the remaining amount through debt.

businessline has reported previously that major banks have balked, and are now refusing to issue the operator fresh loans.

Trouble on all fronts

Subsequently, Vodafone Idea said in September that it is in talks with Indus Towers for better payment terms, after reports emerged that the tower infrastructure warned that Voda Idea ran the risk of losing access to their telecom towers by November if the telco is unable to clear its dues.

As per sources, Vodafone Idea is encountering similar troubles with Nokia as well, wherein they are unable to clear dues.

Vi’s promoter, Vodafone Plc owns a 21 per cent stake in Indus Towers. Earlier this year, Bharti Airtel purchased a stake of 4.7 per cent in Indus Towers from Vodafone Plc. If Vodafone Idea dilutes its equity stake to Indus Towers, Vodafone Plc will be able to increase its stake in Vi, and Airtel will acquire some stake in Voda Idea as well. 

Vodafone Idea owes a whopping ₹2 lakh-crore to various stakeholders, the majority of which is owed to the Government of India. Even as telcos Bharti Airtel and Jio forge ahead with the launch of 5G services, Vodafone Idea struggles far behind, unable to clear its dues.