Vodafone Idea previously said it aims to launch its 5G network in India later this year
India’s third-largest telecom operator, Vodafone Idea, announced its intention to borrow INR 230 billion ($2.75 billion) in term loans and sought an additional INR 100 billion in bank guarantees, according to a report by The Economic Times.
With this funding, the telco aims to be in a better position to compete with rival operator Bharti Airtl and Reliance Jio Infocomm by enhancing its 4G coverage and deploying 5G.
Both Reliance Jio and Bharti Airtel have already deployed pan-India 5G networks.
Vodafone Idea emphasized that while 5G rollout was important, its key priority was to expand and strengthen its current 4G coverage.
Vodafone Idea, which is a joint venture between Vodafone and Aditya Birla Group, submitted its loan proposal to a State Bank of India (SBI)-led banking consortium a few days ago, with the main aim of seeking funds to upgrade its mobile broadband network infrastructure across its 17 priority markets in India.
The report noted that the banks will also seek a techno-economic viability (TEV) report from a top consultancy firm to evaluate Vodafone Idea’s creditworthiness before deciding on the issue.
The news report also highlighted that that some banks remain cautious about increasing their exposure to Vodafone Idea, due to its pending dues with the Indian government and the highly competitive nature of the telecom sector in India.
Vodafone Idea recently concluded its $2.16 billion follow-on public offer (FPO) and also raised about $648.5 million from 74 anchor investors. Vodafone Idea recently said it expects to use the equity and debt funding to deploy its 5G service across India within six to seven months of securing the funds; it was also seeking funds to bolster its 4G network and pay tower vendors.
Vodafone Idea’s chief executive Akshaya Moondra recently local newspaper The Economic Times the telco would not use the proceeds of its FPO to pay debts with vendors.
“FPO proceeds will not be utilized to pay any promoter or promoter group entity. As such, only a maximum of around 17% of the FPO proceeds are for general corporate purposes. We will use it in the best interest of the business and that use could also be capex. Broadly, we hope to pay vendors with the cash flows that we generate from operations, over a period of time,” Moondra said.
Swedish vendor Ericsson recently confirmed that it was in discussions with Vodafone Idea with the aim of securing new orders for 4G and 5G equipment. Recent reports stated that Vodafone Idea was also having talks with Finnish vendor Nokia.
