A Major Relief to Vodafone Idea; Oaktree, Varde offer $2 Bn Funding to the Company

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vodafone idea fundraising
  • This capital infusion, if falls in place, is critical for the telecom carrier post the merger in 2017 as it has been reporting losses.
  • The shares of the company rose as much as 4.4% on Thursday’s trading session.
  • In September, Amazon and U.S telecom company Verizon Communication were in talks for an investment of $4 billion in Vodafone-Idea limited.

A group of investors led by Oaktree Capital has offered to provide at least $2 billion of funding to Vodafone Group Plc’s listed Indian arm, sources close to the matter said.

Varde Partners may also join for the potential deal with Vodafone Idea Ltd. The investor group made a proposal to provide around $2 billion to $2.5 billion of capital to Vodafone Idea, the people said, asking not to be identified because the information is confidential.

However, it wasn’t immediately clear how a potential deal with the Oaktree and Varde Partners-backed consortium would be structured.

Vodafone Idea has also been speaking to other potential investors, and there’s no certainty the negotiations will lead to an agreement, the people said. Representatives for Oaktree, Varde, and Vodafone Idea declined to comment.

This capital infusion, if falls in place, is critical for the telecom carrier formed by the merger of Vodafone Group’s local unit with billionaire Kumar Mangalam Birla’s Idea Cellular Ltd.

Vodafone Idea (recently renamed as ‘Vi’) reported its 9th straight quarterly loss and has not reported an annual profit since the merger was announced in 2017.

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Vodafone Idea also said in September that it plans to raise as much as Rs 25,000 Crore ($3.4 billion) to cover up its finances as competition heats up in the Indian wireless industry since the entry of Mukesh Ambani’s Reliance Jio Infocomm Ltd.

As a result of this speculation, shares of Vodafone Idea rose as much as 4.4% on Thursday in Mumbai. The stock has fallen more than 25% since September 3 when it said its ability to continue as a business relied on successful negotiations with lenders and sufficient cash flow to settle or refinance liabilities coming due.

Vodafone Idea is the weakest financial Telcom company among the remaining Indian wireless carriers, with Rs 1,14,900 Crore ($15.48 billion) of net debt. It was also severely impacted by the Supreme court order last year to pay Rs 50,400 Crore in back fees to the government.

However, in September, the court allowed telecom companies to clear the dues over 10 years period. This has provided the debt-ridden company some relief. Recently, the company also rebranded itself as ‘Vi’ to start with all new energy.

In yet another event in September, the LiveMint report said E-commerce major Amazon and U.S telecom company Verizon Communication were in talks for an investment of $4 billion (approx Rs 30,000 crores ) in Vodafone-Idea limited.

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