Vodafone Idea CEO Akshaya Moondra on Monday said the company is currently focusing to tie-up equity investments first, which is expected to be concluded in the next two months. Basis the equity funding conclusion, banks will lend to the company, Moondra said at the company’s post-earnings call.
Comments from Moondra on first concluding equity funding comes a few days after Kumar Mangalam Birla, chairman of Aditya Birla Group, which is one of the promoter group of the company, said the telecom operator will make significant investments in the upcoming quarters for the rollout of its 5G network as well as expanding its existing 4G coverage.
This also gives a hint that the company’s equity funding might come from the promoters with some strategic investors coming on board. Moondra, however, did not comment on the funding arrangement.
“The total equity plus bank funding that we are targeting is of a nature that we should be able to use that funding to make the investments,” Moondra said. “And then we improve the operations to a point where we become self sufficient in terms of cash generation from business being able to meet our requirements largely,” Moondra added.
The company is also in discussions with external investors to earmark part of the funding to clear some of the past dues of its vendors and use the rest for growth capex.
In August, the promoter likely to be Aditya Birla group had also committed to infuse Rs 2,000 crore into the company for meeting impending payment obligations, but Vodafone Idea is yet to receive that.
“Till date, they (the promoter group) have not contributed anything. The promoter commitment is there, they have said they will support as and when we require, and we expect their contribution to come along the funding from external investors,” Moondra added.
Last month, the company paid Rs 1,700 crore to the government which includes the dues for the 5G spectrum and other spectrum acquired previously. “We had gotten some bank funding to tide over the short-term mismatch that we had in the last quarter,” Moondra said.
In the July-September quarter, Vodafone Idea’s consolidated loss widened to Rs 8,737.9 crore, from Rs from Rs 7,840 crore in the preceding quarter. During the quarter, the company created a tax provision of Rs 822 crore, which the company created as an effect of the Supreme Court judgment to treat licence fee since July 1999 as capital expenditure.
“We have large amount of tax refunds, which we are yet to receive from the tax department. This can convert to cash outflow once tax department completes its calculation,” Moondra said, adding that the tax refunds will most likely offset the tax demand and there will no cash outgo.
On the business impact in absence of 5G, the company said it has not witnessed any significant impact on subscriber base as of now. During the quarter, Vodafone Idea also reduced the validity of the entry level plan of Rs 99 to 15 days from 28 days in 15 circles, now.
When asked about the impact of JioBharat phone, Moondra said, “this was the quarter where we did most of our intervention of changing the entry-level pricing. If JioBharat phone (which is targeting people on entry-level tariffs) has to have any impact, it would have been there because of our tariff intervention, but we have not seen any impact of that”.
The company lost 1.6 million mobile subscribers, taking its user base to 219.8 million at the end of September.
At the end of the July-September quarter, Vodafone Idea’s gross debt (excluding lease liabilities and including interest accrued but not due) rose to Rs 2.13 trillion. The gross debt comprises deferred spectrum payment obligations of Rs 1.35 trillion, AGR liabilities of Rs 68,180 crore that are due to the government, debt from banks and financial institutions of Rs 7,860 crore and optionally convertible debentures amounting to Rs 1,660 crore.
