The Truth About Vodafone And Idea In Talks With Banks For Loan Is About To Be Revealed.

Two persons familiar with the negotiations told ET that Vodafone Idea [NSE 0.00 percent ] (Vi) has conducted conversations with lenders, including consortium leader State Bank of India (SBI), about recasting loans through a potential interest rate freeze, extended payback terms, or reduced rates.

If granted, the recast might help the telecom, which has a funding exposure of almost 14,000 crores. SBI alone has a $11,000 crore exposure.

"Lenders think that the uncertainty regarding the telco's future has passed for the time being," said a source familiar with the negotiations. "Easier loan repayment conditions might be a solid possibility if the promoter contributes more equity or raises more cash."

Vi has also told bankers that it has resumed discussions with foreign investors in order to raise financing for infrastructure improvements.

On Tuesday, Vi's stock rose 6.11 percent to 10.42 on the Bombay Stock Exchange.

Banks can enable renegotiation of loan dues to strengthen the company's liquidity provided the promoter invests in equity, according to the Reserve Bank of India's (RBI) June 2019 restructuring framework.

Kumar Mangalam Birla, Chairman of the Aditya Birla Group, is considering investing $200 million of his own money in Vi, while Vodafone Group may consider selling a portion of its 28.12 percent investment in Indus Towers to fund Vi.

Vi accepted the government's lifeline in the form of a spectrum halt and adjusted gross revenue (AGR) payments, which prompted discussions with lending banks. 

Increasing Buying Power

Over the next four years, Vi will save around 1 lakh crore in total cash flows, giving the business the crucial bargaining power in its discussions with overseas investors. "Vi's top management now has better negotiation conditions and is meeting with a host of foreign investors," a senior industry official familiar with the situation said.

SBI Chairman Dinesh Khara stated last week that the government's decision to grant Vi a moratorium had given the company new life.

"We have no cause to be alarmed at all. They have plans in place to raise funds, among other things, as well as increase their technological investment. As a result, that account is now in good standing "Last week, Khara remarked.

ET's inquiries were ignored by SBI. Vi, on the other hand, was deafeningly quiet.

Last month, ET reported that the telecom was in talks with global private equity firms Apollo Global Management and Carlyle about selling a minority interest. Over the next two to three months, the goal was to raise up to $1 billion (about Rs 7,540 crore).

Vi's lenders have been pressuring the company to raise capital in order to begin paying off its looming financial obligations in December. Vi's entire borrowings, according to Kotak Securities, are worth Rs 23,400 crore, and its yearly interest payments on bank loans are about Rs 2,600 crore. Starting in December, the telecom would have to pay out a total of 6,000 crores to redeem non-convertible debentures (NCDs). Vi also requires the funds rapidly in order to scale up its 4G networks in its 16 priority areas in order to compete more effectively with financially stronger rivals Bharti Airtel NSE 2.70 percent and Reliance Jio, as well as to stop customer losses.