CIOInsider India Magazine
Vodafone Idea to Ease its Cash Crunch by Raising About $ 1 Billion
Vodafone Idea (Vi) plans to ease its cash crunch by raising up to $ 1 billion (around Rs 7,400 crore) from its fixed line broadband subsidiary sales, optic fibre unit and data centres business.
Between December 2021 and April 2022, the telco is expected to pay Rs 22,500 crore in regular debt, adjusted gross revenue, and spectrum dues. On March 31, it had a cash balance of Rs.350 crore and a loss of Rs 6,985.1 crore for the March quarter.
Although a lot of talks with investors took place, Vi still faces a challenge to finalize Rs.25,000 crore fundraise through a blend of debt and equity.
Prior to the events, Chief Financial Officer (CFO) Akshaya Moondra, however, hinted that had plans to raise an additional Rs.3,000 crore in cash this fiscal year through tax refunds and the sale of land parcels purchased for data centres.
The valuation would be determined by the length of the lease agreement Vi enters with the possible buyer, as well as the amount of monthly rent Vi pays toward lease charges
On the other hand, the potential fibre asset sale could take the form of a sale and leaseback arrangement, in which the telecom sells the fibre assets and leases the capacity from the buyer for a long period of time.
With around 267.8 million users, the country's third-largest telco has one data centre in Navi Mumbai and 160,000 kilometres of optical fibre. Its fixed-line broadband business is managed by You Broadband, which it bought from TRG Capital for Rs 400 crore in 2017. You Broadband has 3,000 kilometres of optic fibre and 6,000 km of last-mile connections and is available in 21 cities.
The valuation would be determined by the length of the lease agreement Vi enters with the possible buyer, as well as the amount of monthly rent Vi pays toward lease charges. However, the buyer must be confident in Vi's long-term viability.
Vi attempted to sell the fibre assets and data centre business in 2019, but negotiations broke down due to valuation disputes. Industry sources, on the other hand, believe the telco is more keen to sell now, considering its poor financial situation.
