Following the government’s decision to cap annual payments for AGR dues, people familiar with the matter said Vodafone Idea Ltd is considering raising debt financing to accelerate growth.
India’s third-largest mobile phone operator by users may seek financing from local and global banks, the people said, speaking on condition of anonymity because the deliberations are private. Vodafone Idea plans to use a portion of the proceeds to improve its network and compete better against larger rivals Bharti Airtel Ltd. and Reliance Jio Infocomm Ltd., the people said.
The Economic Times reported in November that the joint venture between Aditya Birla Group and UK’s Vodafone Group Plc was in talks with New York-based Tillman Global Holdings about a potential stake worth several billion dollars. According to the report, this investment was subject to the government providing a financial package to cover all liabilities of Vodafone Idea.
While Vodafone Idea has focused on other options, including debt raising, a potential equity investment could still be on the way, the people said. TGH, as Tillman Global Holdings is known, is in talks with the company’s top shareholders about a large equity investment, one of the people said.
A representative for Vodafone Idea had no immediate comment, while Tillman Global Holdings declined to comment.
To help prevent India’s telecom sector from becoming a monopoly, the central government has agreed to limit annual payments for past spectrum fees to 2035, providing a vital lifeline to Vodafone Idea.
The government is the largest shareholder in the company with 49% stake, followed by Vodafone Group PLC and Aditya Birla Group.
