Vodafone Idea to monetise assets to raise $1 billion

Vi CFO Akshaya Moondra said that the telco expects to generate an additional Rs 3,000 crore in cash this fiscal year. It aims to raise the amount by selling land parcels that were bought for data centres and through tax refunds

Cash-strapped telco Vodafone Idea, rebranded as Vi, is aiming to raise up to $1 billion or Rs 7,400 crore by selling its fixed line broadband subsidiary, optic fibre unit and three data centre businesses. The company is seeking to generate funds to ease its cash crunch.

The telco has been trying to close a Rs 25,000-crore fundraising round through a mix of debt and equity. However, despite several rounds of discussions with multiple investors, Vi has struggled to close the funding round. Vodafone Idea needs to pay Rs 22,500 crore between December 2021 and April 2022 toward a mix of regular debt, adjusted gross revenue (AGR) and spectrum dues. This comes as a cause of concern for the telco that had a cash balance of Rs 350 crore on March 31 and loss at Rs 6.985.1 crore in March quarter.

At an analyst call last week Vi CFO Akshaya Moondra said that the telco expects to generate an additional Rs 3,000 crore in cash this fiscal year, according to a report in The Economic Times. It aims to raise the amount by selling land parcels that were bought for data centres and through tax refunds.

Vi has a data centre in Navi Mumbai and 160,000 km of optic fibre. Its fixed line broadband business is under a subsidiary You Broadband that it acquired from TRG Capital for Rs 400 crore in 2017. The telco tried selling the fibre assets and data centre business in 2019 but talks fell through due to valuation differences.

UK’s Vodafone Group Plc and Aditya Birla Group told the telecom department about its financial struggles in a letter. It sought deferment of spectrum dues of Rs 8,292 crore by a year. It said that its operations were not generating enough cash and its efforts to raise Rs 25,000 crore were cut due to the industry’s ‘below cost’ tariffs. In the fourth quarter earnings report Vi flagged concerns about its viability if it is unable to raise funds.

On Thursday, Bharti Airtel Chairman Sunil Mittal said that the telecom industry is under tremendous stress and that tariffs must be increased. "How long can you keep on killing each other, the point is when you have a return on capital, even by the best operator, at low single-digit and most of them struggling...I am not saying ...raising tariffs always sounds bad...just bring it back to where it was...enjoy 15 times consumption, but at least come back to old tariffs," he said.

Source: https://www.businesstoday.in/industry/telecom/story/vodafone-idea-to-monetise-assets-to-raise-1-billion-300440-2021-07-05