Banks in wait-and-watch mode on fresh funding plans for Vodafone Idea

Studying the implications, and will take deeper look at the company's financials, bankers said

Despite the central government granting relaxations to the country’s third-largest telecom operator, Vodafone Idea (Vi), on its adjusted gross revenue (AGR) dues, domestic banks are still in a wait-and-watch mode as far as fresh funding to the telecom operator is concerned, sources said. Reports suggest that Vi is looking to raise debt to accelerate growth.  Bankers said they will take a deeper look at the company’s financials before taking a call on additional funding to it. 

According to the sources, though there has been no fresh proposal, the company has been seeking ₹35,000 crore of debt funding following the freezing of AGR dues, which is a positive development for Vi. However, banks will take a call after discussing with the company, and among themselves. 

Speaking on the condition of anonymity, a senior banker said: “Nothing has been finalised yet. Banks are looking into it, and the implication of the relaxation granted by the central government. It will be discussed with the company. Following that, there will be a meeting of consortiums of banks to decide on fresh funding.” The banker further said: “There has been no fresh proposal. They (Vi) had proposed a few years back for fresh funding of ₹35,000 crore. They are still sticking to that. This is positive news but we still have to factor in over ₹1 trillion of outstanding spectrum dues before taking a call.” Another banker at a state-owned bank said, "Banks will wait and look deeper about the company before taking a call. We will have to consider the company's financials and future strategies before lending to them.” 

On Friday, Vi said its AGR has been frozen by the government, and that the firm will begin paying a maximum of ₹124 crore a year over next six years, beginning March this year to March 2031. The telco will also pay ₹100 crore annually, from March 2032 to March 2035. 

Earlier, reports had suggested that the central government has frozen the payment amount of the debt-ridden telecom operator at ₹87,695 crore and timelines of the AGR dues — including principal, interest, and interest on penalty — for the period from 2006-07 (FY07) to FY19. The operator had on December 31 denied receiving any communication from the government on the moratorium. 

The remaining AGR dues, after a reassessment, will be paid in equal instalments annually over the next six years, that is March 2036 to March 2041, the telco said in an exchange filing on Friday.