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Vodafone Idea (Vi) has faced a setback in its efforts to secure much-needed funds due to the recent rally in its share price over the last six months. The surge in stock price, which saw an almost 80% increase, has made it challenging to proceed with fund infusion discussions, particularly through a convertible structure. Investors are concerned that the current rally might limit the upside post-conversion within their expected timeframe. Additionally, the reluctance of Vi's promoters, Aditya Birla Group and Vodafone Group, to provide additional collateral, such as a corporate guarantee to lenders, has further complicated the funding situation.
Convertible structures usually involve a combination of debt and equity, allowing debt to be converted into equity at a predetermined price. Private credit funds and special situation funds typically participate in such transactions, with a repayment period averaging two to three years. Vi had set December as the deadline for fund infusion, but the recent stock price surge has temporarily disrupted discussions. The company remains engaged with investors, and the progress of talks depends on Vi's business performance, particularly regarding customer attrition and potential industry-wide tariff revisions.
Vi has faced challenges in retaining its subscriber base, experiencing a decline for nine consecutive months in 2023. In September, the company lost 7.5 lakh mobile customers, bringing its user tally to 22.75 crore. The loss of market share and customer attrition are critical factors affecting Vi's financial health. Despite proposing a business revival plan, including an equity infusion of Rs 14,000 crore in the near term, Vi's net loss for the quarter ended September widened to Rs 8,737.9 crore.
The revenue from operations, however, increased by 0.95%, reaching Rs 10,716.3 crore, driven by a better subscriber mix and 4G subscriber additions. The ongoing discussions with investors are closely tied to Vi's ability to address these operational challenges.
