Vodafone Idea lenders may have to make more provisions

Loss-making telecom operator Vodafone Idea's (Vi) domestic lenders may have to take on additional provisioning burden in case the cash-strapped company fails to raise fresh capital by June end, officials at two banks said.Several lenders had written back provisions on the Vi account in the March quarter after its management assured them that it would raise fresh funds by the end of next month. Now, they say, writing back provisions could have been a hasty move.“We had written back provisions in the March quarter, after the management claimed that it was in definitive talks with investors who would infuse funds in the company. But several months on, this remains a pipe dream,” an executive at one of the top lenders said. “While they have been clearing dues on time, we have to consider taking accelerated provisions if credit quality deteriorates.”The telco has just one more month left to raise at least some part – roughly $1 billion - of its ₹25,000-crore target. 83096628Last September, Vi said it would raise ₹25,000 crore to meet operational expenses and pay statutory dues.“Since September last year, the company has been planning to raise funds, but it’s not come to fruition. Our worry is that this could get delayed further,” said another lender on condition of anonymity.For Vi, fresh capital is crucial to clear upcoming dues. Moreover, if it does not invest in infrastructure, competitors will slowly chip away at its subscribers.State Bank of India, Punjab National Bank, IndusInd Bank, ICICI Bank, Yes Bank, IDFC First Bank, ICICI Bank and HDFC Bank are among its main lenders.Vi has been in fundraising talks with potential investors such as an Oak Hill-led consortium, US private equity firms including KKR, besides Canada Pension Plan Investment Board, Caisse de Dépôt et Placement du Québec (CPDQ) and Norway’s Government Pension Fund Global. The discussions have not yet been successful.Vi did not respond to ET's queries.Parent entities Aditya Birla Group and Vodafone Group have stuck to their stance of not infusing fresh equity and it has become India’s only loss-making private sector telecom operator, rapidly losing subscribers to leading rivals Reliance Jio Infocomm and Bharti Airtel.In its fiscal third quarter, Vi said loans falling due beyond 12 months were at ₹8,691.9 crore as of December 31, 2020.It said that “guarantees amounting to ₹11,371.6 crore are due to expire during the next 12 months and ₹872.7 crore of incremental guarantees are to be provided.”Its fiscal fourth quarter results are expected in June.According to a senior Mumbai-based telecom analyst, time is at a premium for the telco, which has a consolidated debt of ₹1,17,080 crore as of December end.“Over the last six months, there have been a lot of talks but now most of them are on the backburner. The Covid-19 second wave has forced telcos to hold back their tariff increase plans as well. Then there are the AGR (adjusted gross revenue) dues which they have to pay next year. So, the telco is definitely in a tight spot,” the analyst said.Vi has ₹50,400 crore of AGR dues payable to the government over 10 annual instalments through March 31, 2031, starting in March 2022.Unable to increase tariffs due to competitive pressures, Vi needs to raise cash quickly to bolster 4G operations in 16 priority circles to fight financially stronger rivals Airtel and Jio, arrest its steady loss of mobile users and clear the statutory dues.

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