Signal Lost? Vodafone Idea Bets on Rs 25,000 crore SBI Loan To Reconnect

Vodafone Idea Ltd. is in discussions with lenders to raise about Rs 25,000 crore ($2.9 billion) in loans to upgrade its telecom infrastructure and better compete with rivals Reliance Jio and Bharti Airtel, Bloomberg reported, citing people familiar with the matter.

According to the report, the State Bank of India (SBI) is expected to lead a consortium of lenders, with global banks likely to join. The funding is anticipated to be a mix of domestic and international loans with a tenor of around 10 years. "The people, who asked not to be named as the matter is private," noted that the fundraising could be wrapped up within a year.

Government Stake and Previous Funding Hurdles
The attempt to secure new funding follows previous delays due to lenders’ concerns over Vodafone Idea’s precarious financial health and large outstanding dues to the government. However, the efforts have gained momentum amid reports that the Indian government is considering relief for telecom companies burdened with statutory dues.

In April, the government increased its stake in Vodafone Idea to 48.99% after converting part of the telco's spectrum dues into equity. This move gave the financially struggling company a temporary lifeline, though it remains under pressure to fund capex and roll out improved services.

Subscriber Decline and Future Plans
Subscriber attrition remains a key concern for Vodafone Idea. According to Bloomberg, the company is urgently trying to upgrade its network and stop the outflow of customers to larger peers. A successful capital raise would enable the carrier to invest in next-gen infrastructure and regain lost market share.
 

In May, the company’s board approved a plan to raise $200 billion through a mix of equity and debt. On June 24, in response to media speculation about potential relief on its federal dues, Vodafone Idea clarified that it had not received any official communication from the government.

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Both Vodafone Idea and SBI declined to comment on the matter when contacted by Bloomberg.