Confident that funding will take place in coming weeks: Vodafone Idea CEO

VIL had reported narrowing of consolidated loss to about Rs 7,023 crore for the quarter ended March 2021, mainly on the strength of cost optimisation.


Vodafone Idea | fund raising | telecom services

Cash-strapped Vodafone Idea (VIL) on Friday said it is in active talks with potential investors for fund raising, and asserted that ‘floor price’ remains the “best and most preferred” fix for industry’s woes arising from tariff-related issues.

VIL confirmed that it has approached government to extend moratorium on spectrum instalments. The company highlighted that sector’s biggest pain point comes from pricing issues, and conceded that tariff hike is “absolutely” essential to revive the sector, which is under stress.

Speaking at analyst call post Q4 earnings announcement, Ravinder Takkar, CEO of Vodafone Idea said, “On fund raising, we are currently in active discussion with potential investors.” Takkar did not give a firm timeline for fund raising – which has been significantly delayed – but emphasised that the company is fully engaged with investors and “interest” continues.

Shrugging-off queries on whether VIL had an alternate plan ready if it was unable to raise funds, Takkar insisted, “I don’t think there is any reason to start creating Plan B because funding is not happening. We are confident that funding will take place in the coming weeks.” He said that pricing is the “biggest problem” of the industry, and added that floor price remains the “best and most preferred” way to fix the issue.

“Pricing is much lower than it needs to be, whereas the consumption that customers and overall citizens enjoy is significantly higher than what it used to be several years go,” Takkar said.

In a recent SOS to the Telecom Department, the troubled operator had said it will be “unable to pay the instalment of Rs 8,292 crore due on April 9, 2022” due to “cash being used for payment of AGR (Adjusted Gross Revenue) dues and the inability of the operations to generate the required cash in a predatory pricing situation”.

As per the letter to Telecom Secretary on June 25, the company has requested DoT to grant it another year of moratorium to pay this spectrum instalment in April 2023 instead of April 2022. In the letter, VIL has made it clear that “it is almost inevitable” that the company will not be able to pay the said amount in April 2022.

Interestingly, Voda Idea has also mentioned in the letter that while it is working on raising new funding for the last six months “investors are not willing to invest in the company because they believe that unless there is significant improvement in consumer tariffs, the health of the industry will not recover and they will incur loss on their investment”.

VIL had reported narrowing of consolidated loss to about Rs 7,023 crore for the quarter ended March 2021, mainly on the strength of cost optimisation. Vodafone Idea had posted a loss of Rs 11,643.5 crore in the same period a year ago.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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