Even after the government increased its stake in Vodafone Idea (Vi) by converting ₹36,950 crore of spectrum auction dues into equity, bankers remain cautious about extending fresh loans to the financially troubled telecom company.
On March 29, Vodafone Idea announced that the government’s stake in the company had risen from 22.6% to 48.99% following the equity conversion. The telecom operator claimed that this move would significantly improve its prospects for securing debt funding. However, banks are still not fully convinced.
According to a report by The Economic Times, several bankers believe the government’s decision is a positive step but does not completely resolve Vodafone Idea’s financial troubles. The equity conversion covers only dues up to September and accounts for just 15% of the company’s total liabilities. Bankers argue that without a clear repayment schedule for all pending dues, both the company and its lenders remain in a precarious situation, making fresh loan disbursements challenging.
Despite the concerns, Vodafone Idea’s stock surged 20% on April 1 following the announcement, prompting brokerage firms to issue bullish calls. Industry experts noted that banks had long pushed for an equity conversion, as it deferred the company’s obligations to the government for at least three to four years.
One banker highlighted that Vodafone Idea’s financial crisis has now shifted from being a banking issue to a government one. The government must ensure the company remains operational to prevent the telecom sector from becoming a duopoly with limited competition.
As of December 2024, Vodafone Idea’s total debt stood at ₹2.3 lakh crore, posing a significant challenge for both the company and its stakeholders.
