Vodafone Idea, India's third-largest telecom operator, has raised ₹3,300 crore through secured non-convertible debentures, marking a significant milestone in its efforts to revive its financially strained business. This development comes less than eight weeks after the Supreme Court gave the company a fresh lease of life, paving the way for it to reassess its dues to the central government.
The fundraise was conducted through Vodafone Idea Telecom Infrastructure Ltd, a subsidiary of Vodafone Idea, and the proceeds will be used to repay past obligations to the parent company, enabling it to bolster its capital expenditure and support business growth. The interest in the fundraise exceeded the NCD issuance, with large non-banking financial companies, foreign portfolio investors, and alternative investment funds participating.
The fundraise sets off a fresh capital expenditure cycle for Vodafone Idea, according to CEO Abhijit Kishore. The company plans to utilize the funds to scale its network and enhance services for its customers. Discussions relating to long-term debt raise to support capex are ongoing with banks.
The NCD issue is seen as a credit upgrade for the company, with experts noting that it demonstrates the company's progress in addressing its debt issues. Prior to the government's conversion of its spectrum dues into equity, the company's debt was considered junk-rated. However, with the recent developments, the company's debt is now considered investment-grade.
Despite the positive developments, Vodafone Idea still faces significant challenges, including a massive debt of ₹2 trillion, primarily consisting of adjusted gross revenue (AGR) dues and spectrum debt. The company's future depends on the waivers it can secure from the government and its ability to raise debt to finance its network rollout and operations.
Remember, this is a developing story, and investors should do their own research before making any investment decisions. The telecom sector is highly competitive, and companies like Vodafone Idea, Reliance Jio, and Bharti Airtel are continually evolving to stay ahead in the market.
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