Business

IIE DIGITAL DESK : Vodafone Idea Ltd., India’s third-largest telecom operator (known as Vi), is in advanced discussions to raise approximately ₹5,000 crore through debt financing. The funds are to be raised via its subsidiary, Vodafone Idea Telecom Infrastructure Limited, which holds critical infrastructure and renewable energy assets. JM Financial has been appointed as the transaction advisor, and the deal is expected to be finalized within the next two weeks.

This fundraising move is central to Vi’s turnaround strategy—an effort to stabilize operations that have long teetered under massive liabilities and customer churn. The proceeds are earmarked for capital expenditure, particularly for expanding network coverage and selective implementation of 5G services. Structuring the debt through the infrastructure arm is intended to reassure lenders, as these assets offer collateral value distinct from the main operating entity.

Vi has grappled with overwhelming financial burdens, including Adjusted Gross Revenue (AGR) dues which the Supreme Court upheld. While the government took the dramatic step of converting over ₹53,000 crore of dues into equity—reducing immediate cash strain—new capital remains essential. Access to traditional bank funding is limited due to the unresolved nature of these liabilities. Although Vi is exploring bank loans over ₹22,000 crore, such financing hinges on government and regulatory clarity.

Encouragingly, Vi has shown early signs of operational recovery. Subscriber losses have halved in recent quarters—from an average exodus of five million customers to roughly 500,000 net losses—indicating that efforts to bolster 4G coverage and customer service may be paying off. 

Though Vi is now the single largest government-owned telecom operator (with nearly 49% stake), any additional relief remains sensitive. The Minister of State for Communications, Chandra Sekhar Pemmasani, has emphasized that further concessions would require Cabinet-level approval, involving the Prime Minister's Office, Finance Ministry, and the Department of Telecommunications. 

Completing this ₹5,000 crore debt raise would signal to creditors and markets that Vi retains investor confidence and can navigate the capital markets even under pressure. The deal is expected to buy the company critical time to pursue operational gains, attract further funding, and prepare for the resumption of AGR payments due in March 2026. Leveraging the value of towers and renewable energy assets is an attempt to rebuild financial credibility. 

Despite positive strides, Vi’s long-term viability depends on several pivotal factors: securing larger debt and equity funding, consistently improving subscriber retention, and resolving regulatory liabilities. Success in these areas will be vital to forging a sustainable path forward in a highly competitive telecom market dominated by Jio and Airtel. 

Vodafone Idea is in the final stages of negotiating a ₹5,000 crore debt infusion via its infrastructure arm, aimed at financing network expansion and limited 5G rollout. The structure isolates asset risk and aims to bolster lender confidence. Although Vi has faced debilitating financial pressure from AGR obligations, government equity conversion offered short-term respite; but fresh capital remains critical. Encouragingly, subscriber losses are shrinking, indicating operational improvements. Still, achieving a comprehensive turnaround hinges on further investment, continued retention, and regulatory clarity. Government involvement is key, and this fundraising milestone could be a turning point in stabilizing Vi amid structural challenges.