Vodafone Idea is in discussions with a consortium of public sector banks led by State Bank of India (SBI) for additional debt funding and is “hopeful of closing” the deal, as the telecom operator looks to secure financing for its Rs 45,000-crore network expansion plan over the next three years.
The company, during a post-earnings call, said it has structured its fundraising efforts across three lender groups — the SBI-led consortium with six to seven participating banks, Indian private banks, and external commercial borrowing (ECB) lenders comprising foreign banks. It said discussions with all three cohorts have made “substantial progress”. “We are hopeful of closing the discussion with the PSU bank (consortium) led by SBI, as well as continue work on other debt-raised streams,” Abhijit Kishore, chief executive officer, Vodafone Idea said.
During the June quarter, Vodafone Idea raised Rs 6,400 crore in the first tranche of funding. This included Rs 1,183 crore received as part proceeds from warrants issued to promoter Aditya Birla Group. The balance came through debt proceeds, including fund-based and non-fund-based facilities from ECB lenders and Indian private banks.
Multi-Tranche Debt Architecture
Its capital expenditure for the first quarter of FY27 stood at Rs 1,930 crore, lower sequentially due to supply-side constraints, the company said. It added that it has already placed capex orders worth about Rs 9,000 crore with vendors including Ericsson, Nokia and Samsung, with execution having commenced.
Subscriber Rebound
The fundraising comes as the telecom operator reported improved customer metrics during the quarter. Vodafone Idea reported its first quarter of positive net subscriber additions since the merger of Vodafone India and Idea Cellular, with the subscriber base increasing to 193.1 million from 192.8 million in the previous quarter. Mobile average revenue per user (Arpu) rose to Rs 195 from Rs 190 in the March quarter and Rs 177 a year earlier. Even so, it remained below Bharti Airtel’s mobile Arpu of Rs 264 and Reliance Jio’s Rs 215.6 during the quarter.
The management attributed the Arpu improvement primarily to customer upgrades rather than tariff increases, saying the company continues to benefit from “premiumisation” across its subscriber base.
Executives identified three upgrade opportunities driving Arpu growth: migration of 2G users to 4G and 5G, smartphone users who currently use Vodafone Idea largely for voice beginning to consume data on its network, and existing data users shifting from quota-based plans to truly unlimited packs.
“We are upgrading almost to the tune of 3-4% customers every quarter. That’s the whole endeavour on the organic Arpu,” Kishore said.
According to the management, customers moving from 2G to 4G or 5G typically generate an incremental Arpu of around `230-240, while users upgrading from quota-based data packs to the company’s unlimited packs deliver an incremental Arpu uplift of around Rs 30-35. Vodafone Idea said that these upgrade opportunities provide scope for continued organic Arpu expansion even in the absence of tariff revisions.