Oaktree-led consortium offers Rs 15,000 crore funding to Vodafone Idea

Varde Partners among the other participants; Bloomberg report does not specify how the potential deal between the two parties would be structured

A consortium led by Oaktree Capital Management has proposed providing capital of at least $2 billion (Rs 15,000 crore) to Vodafone Idea as the telecom company seeks funds for capital expenditure and debt servicing.

Oaktree has teamed up with several other firms including Varde Partners, Bloomberg reported today. The report did not specify how the potential deal between the two parties would be structured but said that the Oaktree backed consortium has offered around $2-2.5 billion to the stressed telecom firm.

Vodafone Idea had announced plans to raise upto Rs 25,000 crore through a mix of debt and equity in September. Late last month following the second quarter results the company's chief executive officer Ravinder Takkar said the fund raising plans are on track and would be completed in three months.  

"We are in discussions with interested parties. Engagements are going on and progressing well," Takkar had said.

Vodafone Idea did not respond to an email query on Thursday while Oaktree Capital declined comment.

Vodafone Idea, which has been in red for several quarters, saw losses reduce in September quarter to Rs 7,218 crore. In the year-ago quarter, the loss figure was Rs 50,922 crore, while in June 2020 quarter the telco's net loss was Rs 25,460 crore.

While losses have reduced, it has seen significant subscriber churn losing customers to rivals such as Bharti Airtel and Reliance Jio. The company has been facing a cash shortfall and has indicated that its ability to continue as a going concern depends upon successful negotiations with banks for refinancing of loans and guarantees.

At the end of second quarter, the company reported a gross debt of Rs 1.15 trillion which include deferred spectrum payment obligations of over Rs 92,000 crore. 

The Union cabinet had last November provided telecom companies two year moratorium for spectrum related dues. Similarly, next round of adjusted gross revenue (AGR) due payment from Vodafone to the central government is expected in March 2022. Vodafone has AGR liability of Rs 58,254 crore and has to pay it over 10-year period following a Supreme Court order in September.

"Without fund raising and tariff hike the company would not be able to service its loans and carry out capital expenditure. Raising debt could be easier as equity investors are unlikely to take any bets in the company until it raises tariff," said an analyst with a domestic brokerage.

Takkar had also indicated last month the company will not shy away from taking the lead in hiking tariffs and said indications were strong that competitors would follow suit. In the first phase the average revenue per user (ARPU) (per month) of telecom companies needs to increase to at least Rs 200, he had said. Vodafone Idea had an ARPU of Rs 119 in the second quarter, which is the lowest among the telecom companies in India.

Firm sells Indus Towers stake for Rs 3,760 crore

Vodafone Idea has sold its 11.5 per cent stake in Indus Towers for a cash consideration of Rs 3,760 crore, the telecom company informed the stock exchange on Thursday. 

“In accordance with the terms of the agreement and out of the consideration received from Bharti Infratel, the company has made a pre-payment of Rs 2,400 crore, which will be adjusted in line with terms of the agreement," it added.