Cash-strapped telecom service provider #VodafoneIdea has said that banks have completed the techno-economic evaluation (TEV), a crucial milestone in its effort to secure debt funding, and the company is now on track to raise Rs 35,000 crore in term loans and non-fund-based loans or bank guarantees outlined earlier this year.

The TEV study is a risk mitigation exercise undertaken by lenders and financial institutions before a bank or a financial institution decides on its lending decisions for projects.

A company source confirmed that the banks requested an evaluation by a top consultancy to determine Vodafone Idea's creditworthiness and the amount of loans that could be provided.

Vodafone Idea has also reached out to new lenders, including public sector non-bank financiers, who have shown “keen interest” in lending and is in advanced discussions with a consortium of existing lenders led by State Bank of India for Rs 35,000 crore in term loans and non-fund-based loans or bank guarantees.

“We are on track with the fundraising plan outlined earlier this year. We had shared a target of raising Rs 45,000 crore via a combination of equity and debt. The next step is securing debt funding, and we are in active discussions with multiple banks. A key milestone in this process was the updating of the independent techno-economic evaluation initiated by the banks, which was completed recently.”

As part of the revival plan, the company has raised an equity of Rs 24,000 crore in 2024, including Rs 18,000 crore in India’s largest FPO. It is looking for a fund-based facility of Rs 25,000 crore and a non-fund-based facility of Rs 10,000 crore fundraising completed in 2024.

The telco has outlined a capex plan of Rs 50,000–55,000 crore over the next three years, which will be executed through raising debt funds and equities.

Vodafone Idea's total promoter holdings are 38.2 percent, including Aditya Birla Group’s 15 percent and Vodafone Plc Group’s 23.2 percent. The institutional holdings are 20.1 percent, while the non-institutional holdings are 17.9 percent. The government's stake in the company came down to 23.8 percent from about 33 percent after the successful follow-on public offer (FPO) in April.

The government has no immediate plan to divest its stake in Vodafone Idea, and a decision will be made once signs of a turnaround in the telco are visible. Union Minister Jyotiraditya Scindia told Moneycontrol on August 29 that the government won't interfere in Vodafone Idea's operations.

The telco, which has 200 million subscribers, has earmarked a capex budget for 5G deployment and the expansion of 4G coverage in critical priority circles from the equity raise and has sufficient funds from the recent capital raise to support near-term capex needs.

4G/5G negotiations in final stages

The equipment deals with vendors – Ericsson, Nokia, Samsung and Mavenir – for the enhancement and rollout of 4G and 5G network infrastructure is now in the final stages of discussions and the telco will close the agreements soon, a company sources at the condition of anonymity.

European telecom equipment vendors Ericsson and Nokia are seeking to secure 4G and 5G business from Vodafone Idea, not only in circles where they provide services but also where Chinese companies Huawei and ZTE have deployed 4G technology.

However, the European companies are facing competition from US vendor Mavenir and South Korea’s Samsung, which have been running pilot projects of OpenRAN and vRAN technologies, respectively, in some circles, Moneycontrol reported on May 7.

Due to its fairly mature technology compared to Mavenir’s OpenRAN, Samsung could win network deals of Rs 600 crore to replace Chinese 4G network gear in four key telecom circles of Punjab, Bihar, Odisha, and Karnataka.

Vodafone Idea is expanding its 4G coverage and capacity and aiming for 5G services. “Some capex has already been ordered and is under execution, basis which we expect a 15 percent increase in our data capacity and an increase in 4G population coverage by 16 million by the end September 2024,” Akshaya Moondra, chief executive, said in the recent post-earnings conference call.

The telco has a debt of Rs 2 lakh crore, including liabilities and dues to the government.