Vodafone Idea’s discussions with investors and banks for raising funds have gathered pace in the last one month, CEO Akshaya Moondra said on Friday.
Speaking at an analyst call post the January-March quarter earnings, Moondra said that the discussions are progressing well following the conversion of the company’s interest dues worth Rs 16,133 crore into equity by the government.
“Post the government equity conversion, we have been actively engaged with the banks, including the banks with which we were engaged earlier. Promoters have contributed equity in the past and they are ready to contribute some more,” Moondra said.
The CEO added that the third leg of funding needs to come from external investors and multiple discussions are on.
Moondra’s comments come a day after communications and IT minister Ashwini Vaishnaw told FE that the government is concerned over the delay by Vodafone Idea in raising funds.
“Of course, there is a concern because investment is supposed to come. And only after investments, the company can revive. Everyone is concerned,” Vaishnaw told FE, adding that the government is constantly encouraging the promoters to invest in the firm.
Meanwhile, on Friday, Aditya Birla group chairman KM Birla and Vodafone Idea chairman Ravinder Takkar met finance minister Nirmala Sitharaman.
“Even while KM Birla was not on the company’s board, he was engaged with the company. Of course his coming back on board gives a lot of confidence to investors and bankers,” Moondra said.
Vodafone Idea has been trying to raise external funds worth around Rs 10,000 for over a year now. However, a delay in dues conversion by the government into equity also affected the plan.
The company will use the funds to invest in current 4G network expansion as well as 5G rollout to arrest its subscriber churn.
When asked about meeting 5G rollout obligations, Moondra said that the minimum obligation is more a compliance requirement and the company will work on that. “However, we are not only focussed on the rollout obligation but a wider coverage of 5G once the funding is in place,” he added.
Currently, 8% of the devices are 5G-enabled on the Vodafone Idea’s network. At this point, the company is not seeing any churn of subscribers owing to absence of 5G and the company does not see any impact for the next few months, Moondra said.
With regard to raising tariffs in the entry-level plan of Rs 99, the company recently reduced the benefits such as plan validity to 15 days from 28 days in Mumbai.
“We have always stated that tariffs need to go up. Current tariffs are not giving adequate returns to anyone in the industry,” Moondra said.
The company said while it may not be able to take a lead in raising tariff but will follow the competition, which has a higher market share.
Moondra said the current tariff structure of the industry is distorted and pressed for the need of a structure wherein there is a fixed charge and then charging the users based on data usage.
In the January-March quarter, the company’s net loss was at Rs 6,419 crore, lower than the Rs 7,990 crore in the preceding quarter. The loss narrowed owing to fall in network expenses, finance cost, depreciation, among others. Vodafone Idea’s revenue from operations fell 1% q-o-q to Rs 10,506.5 crore.
The company lost 2.7 million mobile subscribers, taking its user base to 225.9 million at the end of March.
