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The telecom joint venture between UK’s Vodafone Plc<\/a> and India’s Aditya Birla Group plans to use the cash for Rs 4,500 crore of pay-outs towards redemption of non-convertible debentures (NCDs) due by February 2022, the people told ET. Vi has already cleared a Rs 1,500 crore tranche towards redemption in early-January and will pay the remaining Rs 3,000 crore in three tranches of Rs 2,000 crore, Rs 500 crore and Rs 500 crore through January-February 2022, according to disclosures in its latest annual report.
Vi’s short-term loans will mature in less than a year, and the interest is likely to be in a wide range of 6.5-8.5% depending on individual banks, one of the people said.
The telco, on its part, is looking to clear these loans with proceeds of its much-awaited equity-based fundraising that it likely to close by end of this fiscal year in March.
\"Vi is planning an equity share sale from global investors … once that happens in the next few months, our loan will be repaid using a portion of the proceeds,” another person said.
Last month, Vi’s top deck indicated on an internal investors’ call that the telco expects to close its equity funding, including from promoters, by end-March. It was the first time Vi’s leadership said the company’s promoters -- Vodafone Plc and the Aditya Birla Group – are likely to inject fresh equity amid efforts to close the telco’s long-pending fundraise.
UK’s Vodafone and the Aditya Birla Group now own 44.39% and 27.66% shares, respectively, in Vi.
Vi, Vodafone Plc and the Aditya Birla Group did not respond to ET’s queries till press time Monday. Queries to SBI, IDFC Bank, HDFC Bank, IndusInd and Union Bank of India also went unanswered. Vi shares closed 1.66% lower at Rs 14.85 on the BSE Monday.
Analysts said optimism around the company’s capacity to repay its short-term loans also stems from the fact that the Big 3 telcos, including Vi, will benefit from the end-November prepaid tariff hikes -- of around 20-25% -- that will push up their average revenue per user (ARPU) as well as mobile revenue sequentially in the December quarter.
\"Vi appears out of the woods … from bankers to the ministry, everyone is helping the company turn around,” said a banking executive who had worked with the company on several business assignments.
Analysts at IIFL Securities expect Vi to continue its fundraising efforts, saying the telco is unlikely to opt for any conversion of interest on deferred spectrum and AGR dues into equity by the January 12 deadline, given its improving prospects.
Vi’s prospects, it said, have improved “after the recent 20% prepaid tariff hikes and with the telco likely having tied up the funding for repaying NCDs maturing between December 2021 and February 2022”.
IIFL estimates that if Vi were to opt for conversion of interest on deferred spectrum and AGR dues into equity, there would be a 52% dilution and the government could end up owning 34% of the telco. This is since Vi owes the government more than Rs 1.72 lakh crore in deferred spectrum and AGR dues as of end-September.
“As its prospects have improved, Vi is likely to continue its fundraising efforts from promoters and other investors rather than letting the government acquire a significant stake in the company,” IIFL said in a note.