The telecommunications joint venture between Britain’s Vodafone Plc and India’s Aditya Birla group plans to use the money for Rs 4,500 crore in payments for the buyback of non-convertible bonds (NCDs) due by February 2022, the officials said. people at ET. Vi has already cleared a slice of Rs 1,500 crore for repayment in early January and will pay the remaining Rs 3,000 crore in three installments of Rs 2,000 crore, Rs 500 crore and Rs 500 crore until January. -February 2022, according to disclosures in its latest annual report.
Vi’s short-term loans will mature in less than a year and interest is expected to be in a wide range of 6.5% to 8.5% depending on the banks, one of the people said.
The phone company, for its part, is looking to clear those loans with the proceeds of its highly anticipated equity fundraiser which it is expected to close by the end of this fiscal year in March.
“Vi is planning a sale of shares to global investors… once that happens in the next few months, our loan will be paid off using part of the proceeds,” said another.
Vi’s Upper Deck last month indicated on a call from inside investors that the phone company plans to close its equity financing, including from developers, by the end of March. This was the first time that Vi’s management said that the company’s promoters – Vodafone Plc and Aditya Birla Group – would likely inject new shares as part of efforts to close the company’s long-standing fundraiser. phone.
Britain’s Vodafone and the Aditya Birla group now hold 44.39% and 27.66% respectively of Vi’s shares.
Vi, Vodafone Plc and the Aditya Birla group did not respond to questions from ET until press time on Monday. Requests to SBI, IDFC Bank, HDFC Bank, IndusInd and Union Bank of India also went unanswered. Vi shares closed down 1.66% at Rs 14.85 on BSE on Monday.
Analysts said optimism about the company’s ability to repay its short-term loans also stemmed from the fact that the Big 3 carriers, including Vi, will benefit from the prepaid tariff increases at the end of November – of around 20-25% – which will increase their Average Revenue Per User (ARPU) as well as their mobile revenue sequentially during the December quarter.
“Vi is coming out of the woods … from bankers to the ministry, everyone is helping the business turn around,” said a banking executive who had worked with the company on several trade missions.
IIFL Securities analysts expect Vi to continue with its fundraising efforts, saying the phone company is unlikely to opt for a conversion of interest on deferred spectrum and AGR contributions into equity of here the deadline of January 12, given its prospects for improvement.
Vi’s outlook, he said, has improved “after recent prepaid rate hikes of 20% and with the phone company likely to have blocked funding for reimbursement of MNTs maturing between December 2021 and February. 2022 ”.
The IIFR estimates that if Vi opted to convert deferred spectrum interest and AGR contributions into equity, there would be a 52% dilution and the government could end up owning 34% of the phone company. This is because Vi owes the government over Rs 1.72 lakh crore in deferred spectrum and AGR dues at the end of September.
“As its outlook has improved, Vi will likely continue its fundraising efforts from developers and other investors rather than letting the government acquire a significant stake in the company,” the IIFR said in a note.
ICICI Securities estimates that Vi’s ARPU will increase by 4.2% sequentially to Rs 114 during the October-December period, while BofA Securities expects its wireless business revenue to increase by 3.5 % compared to the previous quarter. In fact, the full impact of the latest round of prepaid rate hikes would be visible in the current fiscal quarter, these brokerages said.
Vi, with a cash balance of Rs 250 crore at the end of September, has been in talks with a large number of private equity players such as US firm Apollo Global for equity and debt financing, as it seeks to straighten out its operations.
Vi company – born out of the merger of former Vodafone India and Idea Cellular in August 2018 – has lost millions of customers and a share of revenue each quarter over the past three years to stronger rivals Reliance Jio and Bharti Airtel. This was mainly due to its inability to adequately invest in expanding its 4G networks to match Jio and Airtel on mobile broadband coverage, a scenario exacerbated by its delayed fundraising.
But backed by the recent government-approved telecommunications reform package, followed by widespread prepaid rate hikes in November, things have started to improve again. Vi, in fact, recently said on an investor appeal that he was aiming to quadruple annual capital spending to $ 2 billion (around Rs 15,000 crore) after his fundraiser concluded.