Vodafone Idea's Board Set To Meet On 4 Sept To Discuss Fundraising

Late on Tuesday, Vodafone Idea in a statement to the exchanges said that its Board of Directors is scheduled to meet on 4 September to "to consider and evaluate any and all proposals for raising of funds in one or more tranches."

Shares of the company rose as much as 10 percent in trade on Wednesday to Rs 10.15 apiece.

The announcement of fundraising discussions comes on the same day that the Supreme Court gave telecom operators 10 years to clear their AGR (adjusted gross revenue) payments in a staggered manner with an upfront payment of 10 percent by 31 March 2021.

Shares of Vodafone Idea had plunged as much as 17 percent on Tuesday after the verdict and closed 12.76 percent lower at Rs 8.89.

The fundraising is much needed for the telco as various estimates reported in the media suggests that the company will have to pay around Rs 7,850 crore in annual installments, on an average. Vodafone Idea has so far paid Rs 7,854 crore in AGR dues and had a cash holding of about Rs 3,450 crore as of 30 June. Gross debt (excluding lease liabilities) as of June was Rs 1.18 lakh crore, including deferred spectrum charges of Rs 92,270 crore.

The company owes Rs 58,254 crore to the government and currently has the weakest balance sheet among other Indian telcos. Bharti Airtel, on the other hand, has fully provided for the AGR dues of Rs 43,980 crore.

According to an analyst from Fitch Ratings quoted by CNBC-TV18, the Vodafone Idea's EBITDA is insufficient to even pay interest expenses of its estimated $700-800 million a year. The analyst further said that it will need an average revenue per user (ARPU) of Rs 300 to survive, which is more than double of the current Rs 114.