Vodafone Idea is ‘in talks’ with SBI for loan, asked to give
State Bank of India has asked Vodafone Idea Ltd, a joint venture between Vodafone and billionaire Kumar Mangalam Birla’s group, to first outline a turnaround strategy, the people said, asking not to be identified as discussions is private.
According to people familiar with the matter, the government-owned lender has asked Vodafone Idea to present a detailed plan on its financial viability, including equity infusion from largest shareholders, cash conservation plan, tariff outlook and road map for return on profits. Is.
People said the mobile phone operator is preparing this information for the lender. Discussions are still ongoing and there is no assurance that the company will receive this funding.
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State Bank of India did not respond to an email seeking comment. Vodafone Idea, which is reporting its quarterly earnings on Friday, declined to comment.
The bank loan, if it materializes, will be a lifeline for the company, which hasn’t reported annual profit since Mukesh Ambani’s Reliance Jio Infocomm Ltd started the tariff war in 2016 and over the past year. Lost customers to big rivals. Banks have become more responsive to the unprofitable wireless operator after India announced several policy relief measures in September, helping Vodafone Idea avert the threat of bankruptcy.
India’s third largest wireless operator escaped potential bankruptcy after the government gave mobile phone companies more time to pay their dues. This will eliminate some of the bank guarantees given by Vodafone Idea to the government, giving more scope for lenders to extend loans, a person said.
According to a September 15 note by brokerage JM Financial, Vodafone Idea’s total debt stood at Rs 1.9 trillion ($26 billion) at the end of June, with the government at Rs 1.68 trillion and the remaining Rs 234 billion from lenders.
State Bank of India has the highest exposure to Vodafone Idea among other lenders, people familiar with said.
(In collaboration with Ashutosh Joshi.)
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