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Vodafone Idea (Vi) is in advanced discussions with public sector banks to secure a significant portion of its planned bank funding, with CEO Abhijit Kishore indicating that the telecom operator does not need to raise the entire amount upfront and will draw down funds in phases depending on its capital expenditure requirements.
The company has lined up Rs 35,000 crore in funded facilities and another Rs 10,000 crore in non-funded credit facilities as part of its broader funding plan to support network expansion and improve its competitive position in the telecom market.
"We don't need all that money in one go. Whatever money is required to bring the capex intensity, which is where you see that we doubled the capex intensity, and this intensity is going to continue over the coming quarters as well, is something we are looking at," Kishore said during the company's Q2 post-earnings interaction with analysts.
He indicated that discussions with Indian public sector banks, which constitute the largest portion of the proposed funding pool, are close to closure.
"I think that conversation is the large kitty, and I hope that when I meet next, I'm able to share a good thing with that. But yes, that's very close to the closure," he said.
The CEO added that Vodafone Idea would draw down the funds as and when required, rather than waiting for the entire funding arrangement to be tied up before proceeding with its network investments.
The clarification comes amid questions from analysts over the pace of bank funding mobilisation and the apparent gap between the company's announced credit facilities and the bank borrowings reflected in its September-quarter financials.
CFO Tejas Mehta said that the funding arrangement comprises both funded and non-funded facilities, with the company initially utilising the latter, including credit facilities and letters of credit, to support capital expenditure deployment.
He said the company had already started drawing down funds under the new facilities, with more than Rs 800 crore of the borrowings reflected in the September-quarter numbers coming from the new arrangement.
"Almost all of what you see now, over Rs 800 crore, is part of the new drawdown. That will continue to increase as we exhaust our facilities and make payments towards them," he said.
The CFO clarified that the entire loan amount was not immediately reflected as bank debt because Vodafone Idea was first using non-fund-based facilities before moving to funded drawdowns. The company expects the utilisation of these facilities to increase in the December quarter.
The fundraising is critical for Vodafone Idea as it accelerates network investments to improve coverage, capacity and service quality, while attempting to arrest subscriber losses and strengthen its competitive position against Reliance Jio and Bharti Airtel.
Kishore said the company had doubled its capital expenditure intensity and intended to sustain the higher pace of investments over the coming quarters.
The CEO also pointed to improving subscriber trends, particularly in the prepaid and postpaid segments, as evidence that network expansion was beginning to translate into better customer acquisition and retention.
Vodafone Idea has been attempting to revive its business through a combination of network investments, tariff and premiumisation initiatives, and a stronger enterprise business.
Kishore said the company was also looking to expand its enterprise business beyond traditional connectivity into IoT, digital infrastructure, managed security services and cloud.
