Centre Approves 15,000 Cr FDI for Vodafone Idea

Cash Strapped Vodafone Idea's (Vi) get a nod from the centre for its Rs 15,000 crore foreign direct investment (FDI) proposal. The telco had sought the government's approval for the FDI in order to fund its operations in India. 

The decision was made by a top-level group, that include representatives from the ministries of finance, home affairs, external affairs and commerce and industry. 

This move is expected to aid Vodafone Idea raise funds to offload some of its dues associated to adjusted gross revenue (AGR), pare debts and utilise the money for operational expenses. 

A Department of Telecom (DoT) official has stated the publication that the approval indicates that the government doesn't want the telco to go bust. 

In September 2020, the telco had said in a regulatory filing that the telco's board of directors had given their nod to the proposal of raising Rs 15,000 crore each through the issue of equity shares of several forms and debt, with the cumulative amount not exceeding 25,000 crore. However, the company couldn't go ahead with its fundraising plans.

The board approval also included the issuance of "unsecured and/or secured, non-convertible debentures" up to an aggregate amount of 15,000 crore, by way of public offering or private placement basis or otherwise, in one or more tranches.

The fund-raising will throw a lifeline to cash-strapped VIL, which has suffered massive losses, as it has been losing subscribers and average revenue per user (ARPU), and faces outstanding AGR dues of 50,399.63 crore as per government data.

In a statement, Ravinder Takkar, MD & CEO, Vi said, "We are in active discussion with potential investors for fund raising, to achieve our strategic intent."

The company in the last quarter of 2020-21 had reported narrowing of its consolidated loss to Rs 7,022.8 crore for the quarter ended March 31, 2021. The total income of Vodafone Idea dropped by about 19 percent to 9,647.8 crore from Rs 11,920.4 crore in the corresponding quarter of 2019-20.The gross debt (excluding lease liabilities) as of March 31, 2021, stood at Rs 1,80,310 crore.