After relief from Indian government, Vodafone Idea reportedly turns to banks for a loan recast

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After relief from Indian government, Vodafone Idea reportedly turns to banks for a loan recast
Kumar Mangalam Birla and Vittorio Colao.BCCL
  • Vodafone Idea is in talks with its lenders for a loan recast.
  • The telco last month opted for the adjusted gross revenue (AGR) dues moratorium.
  • Kumar Mangalam Birla may infuse $150 million into Vodafone Idea.
Vodafone Idea and Airtel last month opted for the adjusted gross revenue (AGR) dues moratorium that was announced by the government as part of the telecom relief package.

By opting for the moratorium, Vodafone Idea was able to free up its cash-flow by up to ₹60,000 crore for four years, putting it in a better position to recover from its woes.

According to a report by The Economic Times (ET), now Vodafone Idea is in talks with its lenders, including a consortium led by the State Bank of India (SBI), its biggest lender for a recast of loans.

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"After the government extended relief to the telco, lenders believe that uncertainty over its future is over for now," said an official aware of the discussions to ET.

Vodafone Idea is reportedly looking for a stay on its interest payments, lower rates or a longer payment tenure. Banks have an exposure of ₹28,740 crore to Vodafone Idea, of which, SBI alone has an exposure of ₹11,000 crore.

What is a loan recast?



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A loan recast is restructuring of a loan, offering concessions such as stay on interest, longer repayment tenure, lower interest or a combination of these.

Banks’ exposure to Vodafone Idea:

BankAmount% of loan book
IDFC First Bank₹3,240 crore2.90%
Yes Bank₹4,000 crore2.40%
IndusInd Bank₹3,500 crore1.65%
Punjab National Bank₹3,000 crore0.44%
State Bank of India₹11,000 crore0.43%
ICICI Bank₹1,700 crore0.23%
Axis Bank₹1,300 crore0.21%
HDFC Bank₹1,000 crore0.09%
Source: Nomura

Vodafone Idea has reportedly also informed its lenders that it has resumed talks with global investors to raise funds. The funds will be used by the telco for infrastructure improvement.
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As per reports, Aditya Birla Group chairman Kumar Mangalam Birla may infuse $150 million into the company, followed by Vodafone Group which is expected to monetise a part of its stake in Indus Towers and invest it into Vodafone.

The AGR dues moratorium and reports of fresh investments have also boosted the confidence of banks in Vodafone Idea.

"There is no reason for us to be really concerned. They have plans which they are working on in terms of raising capital, etc, and also increasing the investment in technology. So, that account is back on track,” said SBI Chairman Dinesh Khara.
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Business Insider India has written to Vodafone Idea and is awaiting a response.

SEE ALSO:

Vodafone Idea and Airtel need tariff hikes, AGR moratorium might not be enough, say analysts

Airtel, Vodafone Idea and Jio welcome telecom relief package, but analysts are divided on whether it is enough

Yes Bank, SBI and others want Vodafone Idea to be saved, here’s why
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