State Bank of India has asked Vodafone Idea<\/a>, a joint venture between Vodafone and billionaire Kumar Mangalam Birla<\/a>’s conglomerate, to first outline a turnaround strategy, the people said, asking not to be identified as the discussions are private.
The government-owned lender has asked Vodafone Idea to present a detailed plan on their financial viability including equity infusion from the largest shareholders, cash conservation plans, tariff outlook and a road map to return to profits, according to the people familiar.
The mobile-phone operator is preparing this information for the lender, the people said. Discussions are still underway and there’s no assurance the company will receive this funding.
State Bank of India didn’t respond to an email seeking comments. Vodafone Idea, which is reporting its quarterly earnings on Friday, declined to comment.
The bank loan, if it materializes, will be a lifeline for the company which hasn’t reported an annual profit since Mukesh Ambani’s Reliance Jio<\/a> Infocomm Ltd. unleashed a tariff war in 2016 and has been losing subscribers to bigger rivals in the past year. Banks have become more amenable toward the unprofitable wireless operator after India announced a slew of policy relief measures in September which helped Vodafone Idea avert an insolvency threat.
India’s third-largest wireless operator survived a potential bankruptcy after the government allowed more time to mobile phone companies to pay their dues. This will extinguish some of the bank guarantees Vodafone Idea gave to the government, giving the lenders more elbow room to extend credit, one of the persons said.
Vodafone Idea’s total debt was 1.9 trillion rupees ($26 billion) as of June-end, including 1.68 trillion rupees owed to the government and the remaining 234 billion rupees to lenders, according to a Sept. 15 note from brokerage JM Financial.
State Bank of India has the highest exposure to Vodafone Idea among other lenders, the people familiar said.
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