You are here: Home » Companies » News
Business Standard

Vodafone Idea 'in talks' with SBI for loan, asked to give turnaround plan

Bank has asked Vodafone Idea to present a detailed plan on their financial viability including equity infusion from the largest shareholders, says Bloomberg.

Topics
Vodafone Idea | Kumar Mangalam Birla | Indian state banks

Suvashree Ghosh & P R Sanjai | Bloomberg 

Vodafone Plc

Vodafone Plc’s troubled India unit is in talks with the country’s largest lender about fresh loans, according to people familiar with the matter, in a deal that could pave the way for other banks to offer credit and boost survival chances of the cash-trapped wireless operator.

State Bank of India has asked Ltd., a joint venture between Vodafone and billionaire Kumar Mangalam Birla’s conglomerate, to first outline a turnaround strategy, the people said, asking not to be identified as the discussions are private.

The government-owned lender has asked to present a detailed plan on their financial viability including equity infusion from the largest shareholders, cash conservation plans, tariff outlook and a road map to return to profits, according to the people familiar.

The mobile-phone operator is preparing this information for the lender, the people said. Discussions are still underway and there’s no assurance the company will receive this funding.

ALSO READ: Vodafone Idea working on 'comprehensive' revival plan, banks to recast debt

State Bank of India didn’t respond to an email seeking comments. Vodafone Idea, which is reporting its quarterly earnings on Friday, declined to comment.

The bank loan, if it materializes, will be a lifeline for the company which hasn’t reported an annual profit since Mukesh Ambani’s Reliance Jio Infocomm Ltd. unleashed a tariff war in 2016 and has been losing subscribers to bigger rivals in the past year. Banks have become more amenable toward the unprofitable wireless operator after India announced a slew of policy relief measures in September which helped avert an insolvency threat.

India’s third-largest wireless operator survived a potential bankruptcy after the government allowed more time to mobile phone to pay their dues. This will extinguish some of the bank guarantees Vodafone Idea gave to the government, giving the lenders more elbow room to extend credit, one of the persons said.

Vodafone Idea’s total debt was 1.9 trillion rupees ($26 billion) as of June-end, including 1.68 trillion rupees owed to the government and the remaining 234 billion rupees to lenders, according to a Sept. 15 note from brokerage JM Financial.

State Bank of India has the highest exposure to Vodafone Idea among other lenders, the people familiar said.

(With assistance from Ashutosh Joshi.)

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, November 12 2021. 09:06 IST
RECOMMENDED FOR YOU
.