Banks are unwilling to extend fresh loans to Vodafone-Idea (Vi) till there is clarity over the infusion of funds by promoters or debt-to-equity conversion by the government.

“Banks don’t know where the fresh capital infusion will come from. In such circumstances, their reluctance is quite understandable,” a banking industry source said.

Bankers said promoters had talked about raising Rs 25,000 crore but so far have been able to put in only Rs 4,900 crore, the bulk of which also went away in clearing some dues of tower company Indus Towers.

Vi’s main shareholders, UK-based Vodafone Group and Aditya Birla Group are currently seeking equity conversion from the government. However, as telecom minister Ashwini Vaishnaw said on Thursday, conversion of equity alone would not solve the company’s financial problems and capital infusion from multiple sources was the need of the hour. “Vi has many requirements. It has a particular requirement for capital. How much capital, and who will infuse? All those things are under discussion at this point, in time,” Vaishnaw said.

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According to reports, Kumar Mangalam Birla met the telecom minister on Thursday seeking to nudge the government to convert the licence fee and spectrum dues of the company into government equity.

Vi’s current bankers include the State Bank of India, IndusInd Bank, IDFC First Bank, YES Bank, and IDBI Bank.

Reeling under a debt burden of around Rs 2.3 trillion, Vi opted for converting about Rs 16,000 crore of interest liability payable to the government into equity. The conversion will amount to around a 33% stake in the company and reduce promoters’ holding to 50% from 74.99%.

Vi has offered a stake to the government at a par value of Rs 10 per share. However, the company’s share price has been trading below Rs 10 for many months. On Friday, its share price closed at Rs 7.85, down 0.65%. In the past year, its share has fallen almost 48%.

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In November, FE had reported that the carrier needed to raise about $3 billion in all to avert an immediate financial crunch — with any government rescue package coming on top of that.

“Raising fresh funds from other sources has also been difficult for the company because of this lack of clarity. Unless the promoter or the government shows some commitment to reviving the company, it will quite difficult to raise more money,” the source said.

As of September 2022, VIL had a negative net worth of Rs 75,830 crore.

VIL’s requirement for fresh loans is because it has to repay operational creditors like Indus Towers, which has written stern letters to the company in November and December seeking timely payment, or else the services will be affected.

The telecom operator had said that it will make part payments in November and December, but from January it was committed to making full payments. It also said that overdue receivables will be realised by July 2023.

Apart from Indus Towers and ATC, the company also needs urgent funds to pay Nokia and Ericsson. It also needs funds for the rollout of 5G services.