Vodafone Idea, which is struggling to repay $14-billion net debt, has approached creditors for better payment terms to revive the company, Bloomberg reported.
Vodafone Idea has warned lenders that it won’t be able to honour its commitments for long under current conditions. One of its requests was a temporary halt to loan payments, although no formal proposal has been made.
A Vodafone Idea spokesman said the company hasn’t asked lenders to rework payment terms and the carrier continues to pay all its debts as and when they fall due.
“The financial stress in the telecom sector is well acknowledged and all telecom operators have asked for requisite help in reducing it,” the firm said in the statement.
A spokesman for the UK-based Vodafone Group pointed to a filing by the India venture in July that stated Vodafone Idea had been in discussions with lenders for some waivers in the prior quarter.
India’s Supreme Court has asked No. 2 phone operator to pay about $4 billion in past dues. Vodafone Idea has been losing subscribers and reporting losses every quarter since the two partners announced their merger in 2017, while the entry of billionaire Mukesh Ambani’s wireless provider Reliance Jio Infocomm a year earlier with free calls and cheap data added to the venture’s woes.
An upfront liability for Vodafone India may compel it to appeal to the National Company Law Tribunal, analysts GV Giri and Balaji Subramanian at IIFL Securities wrote in a report last week.
Vodafone Idea may not press for a debt recast if the government take substantial steps to ease the burden of the carriers.
Vodafone Group reluctantly participated in a rights issue by Vodafone Idea earlier this year that raised $3.5 billion.
The losses at the Indian carrier may be pushing Vodafone Group toward the exit door.
Vodafone Idea, in a filing on July 26 said, classified Rs 10,200 crore from non-current borrowings to current maturities of long-term debt for not meeting some covenant clauses for specified financial ratios. Vodafone exchanged correspondences / in discussions with lenders for the next steps/waivers in the June quarter.
Vodafone Idea has enough cash reserves to service its debt obligations. The company had cash and equivalents worth Rs 7,550 crore as of March 31.
Lenders to Vodafone Idea through loans and bank guarantees include State Bank of India (SBI).