Vodafone Idea gets Rs 2,000 crore from HDFC Bank; meets SUC payment obligations

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HDFC Bank, India’s largest private sector lender, has granted a loan of Rs 2,000 crore to Vodafone Idea (Vi) to support the struggling telecom company in addressing its pending license fees and meeting its commitments for 5G spectrum payments.

The loan has a two-year tenure, with disbursement occurring in mid-September, just before specific loan and statutory payment deadlines, as reported by The Economic Times on November 2.

Vi has already made payments exceeding Rs 350 crore for FY22 and FY23 for past license fees and approximately Rs 1,700 crore toward spectrum usage charges (SUC). The company is also in discussions with potential investors for equity funding.

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A promoter group entity of Vodafone Idea Ltd (VIL) has pledged Rs 2,000 crore in support to the company, should it require financial assistance to meet impending payment obligations, according to a regulatory filing made by the telecom operator on August 14.

As of June 30, 2023, Vi has reported a gross debt of Rs 2.11 lakh crore. Nevertheless, the company has settled all statutory dues up to the second quarter of 2022-23 and is now expediting payments for license fees and spectrum usage charges (SUC) for the third quarter of the previous fiscal, surpassing its earlier payment schedule.

In a recent statement, Chief Executive Akshaya Moondra confirmed that the promoters are committed to injecting an additional Rs 2,000 crore into the company. This investment is expected to complement external investments and facilitate the settlement of spectrum dues by the end of March. Moondra anticipates the conclusion of equity investment discussions this quarter.

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Moondra also mentioned that the company is in negotiations with various network vendors to finalize its rollout strategy. However, significant capital expenditures on networks will only occur once funding is secured. The company is encouraging its equity partners to allocate a portion of the funds to settle outstanding vendor dues, while also expediting payments to vendors.

On October 26, the telecom services operator reported a net loss of Rs 8,737.9 crore for the quarter ending in September, compared to Rs 7,595.5 crore in the same quarter the previous year.

Its revenue from operations amounted to Rs 10,716.3 crore, reflecting a 0.95 percent increase from Rs 10,614.6 crore in the corresponding quarter, as disclosed in an exchange filing. The revenue growth was driven by an improved subscriber mix and increased 4G subscriber additions.

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The company’s EBITDA (earnings before interest, taxes, depreciation, and amortization) increased from Rs 4,097.5 crore to Rs 4,282.8 crore, with a 140 basis points improvement in EBITDA margin year on year, reaching 40 percent.

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