Voda Idea in 'highly stressed situation', but won't infuse more equity: Vodafone CEO Read

Vodafone Group, co-parent of Vodafone Idea (Vi), will not infuse anymore equity in the loss-making Indian telco which has been desperately trying to raise funds and stay afloat.

Vodafone Group CEO Nick Read in a July 23 analyst call, said that Vi is navigating through difficult times and although the group is providing “practical support”, it will not invest fresh equity.

“… So, I mean, it is…a highly stressed situation, a difficult situation that they are trying to navigate. I mean, we as a group try to provide them as much practical support as we can but I want to make it very clear, we are not putting any additional equity into India,” said Read.

Read was responding to a query on what is Vodafone Group’s strategy for the Indian operator which is under financial duress. The telco has raised concerns over its viability in both the Supreme Court and informed the government as well.

“…within the going concern statement, they highlighted very clearly, they are dependent as a going concern on refinancing debts that are coming…monetisation of assets, in terms of government support, AGR or floor pricing, etc., and raising funds,” Read said.

While Read made the Vodafone Group’s stance clear, Kumar Mangalam Birla, chairman of Aditya Birla Group (ABG), has told the government that the diversified conglomerate is “more than willing” to give its stake in Vi to any public sector or domestic financial entity who can keep the company afloat. Birla had written his views in a letter to the Cabinet Secretary on June 7, which predated both UK telco’s comments and the latest AGR verdict.

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Coincidentally on July 23, the Supreme Court in India in a ruling, didn’t give any relief on AGR dues, confirming Vi’s liability at Rs 58,254 crore of which it has paid more than Rs7,800 crore. The company, which had pegged its viability on reduction in its AGR dues among other factors, needs to pay Rs9,000 crore towards the first instalment by March 31, 2022.

ABG and UK-based Vodafone Group Plc – the two parents of VIL – hold 27.66% and 44.39% respectively in the cash-strapped telecom company.

Infact , it was in April 2020 when Vodafone Group injected Rs 1,530 crore ($200 million) into Vi under a condition agreed upon during the 2018 merger of its Indian subsidiary and Idea Cellular. Including that, the potential exposure of the UK based telecom this mechanism was limited to Rs 8,400 crore (1.1 billion euros).

Vi, born out of the largest merger in India Inc-that of Vodafone India and Idea Cellular on August 31, 2018 has never reported a quarterly profit since its merger. Plagued by a debt of Rs1.8 lakh crore, the telco is staring at a potential $3.1 billion (Rs 23,500 crore) shortfall in cash flows in FY23, given its upcoming payments including AGR instalment, spectrum payments interest cost, as per brokerage Kotak.

Its net loss in the January-March quarter was Rs 6985.1 crore and cash balance was at Rs 350 crore.



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