Vodafone Idea gets board of directors’ nod to raise Rs 1,600 cr from ATC

Vodafone Idea: Loss-making telecom operator Vodafone Idea (Vi) on Friday approved a proposal to raise up to Rs 1,600 crore from mobile tower company ATC Telecom Infrastructure via optionally convertible debentures (OCDs) and use the proceeds to pay the dues of the tower company. This is expected to give a boost to the financially-stressed telecom operator which has so far struggled to raise capital from investors.

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“The Board of Directors of Vodafone Idea Limited at its meeting held today – October 21, 2022 – has, inter-alia, approved issuance of up to 16,000 Indian Rupee denominated optionally convertible, unsecured, unrated and unlisted debentures having a face value of Rs 10,00,000 each, in one or more tranches, aggregating up to Rs 1,600 crores, convertible into equity shares at a conversion price of Rs 10 per equity share, to ATC Telecom Infrastructure Private Limited,” VIL said.

ATC dues

“The funds raised shall be used to pay ATC amounts owed to ATC by the firm under the master lease agreements and, to the extent of any remainder, for general corporate purposes of the company,” said the company. Currently, VIL’s tower dues stand at Rs 10,000 crore. Out of this, Rs 7,000 crore is owed to Indus Towers alone, while Rs 3,000 crore is owed to ATC.

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5G service delay

Vi’s inability to raise funds has hindered its payments to vendors and also the rollout of 5G service. The conversion of interest on adjusted gross revenue dues into equity for the government too has not materialized yet.

The funding delays also resulted in the telco failing to close contracts with telecom gear makers Ericsson and Nokia for 5G equipment. Its rivals Bharti Airtel and Reliance Jio have begun rollout of their 5G service. While Airtel has said it is offering 5G service in eight cities, Jio is carrying out beta trials in four.

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