A consortium led by the State Bank of India (SBI) is reportedly in discussions to extend debt funding of Rs 250 billion to Vodafone Idea Limited (Vi), signalling that lender confidence in the operator has improved following the government’s decision to cut its dues by 27 per cent last week.
The telecom operator, which has outlined a three-year turnaround plan, is seeking a term loan of Rs 250 billion in addition to Rs 100 billion in short-term working capital.
The Department of Telecommunications (DoT) had earlier reduced Vi’s adjusted gross revenue (AGR) liabilities from Rs 876.95 billion to Rs 640.46 billion, providing significant cash-flow relief. The bulk of the payments have been staggered to FY36-41, effectively granting a 10-year moratorium on Vi’s liabilities and creating headroom for the company to invest in its networks.
Bankers said the AGR development is a positive for Vi as it allows the company to focus on infrastructure investment rather than managing government dues. However, they remain cautious given Vi’s difficult position, having steadily lost market share to larger rivals Reliance Jio and Bharti Airtel.
Vi is targeting double-digit annual revenue growth and aims to triple its earnings before interest, taxes, depreciation and amortisation over three years, which it believes will allow it to service pending spectrum dues from internal accruals.
Beyond AGR, Vi faces spectrum-related payment obligations of Rs 70 billion in FY27, Rs 150 billion in FY28 and Rs 280 billion in FY29. Bankers noted that while the AGR relief will meaningfully reduce the company’s government liabilities, Vi still needs to demonstrate a stronger repayment capability.
