Lenders are demanding that Vodafone Idea scale back its financial projections and secure a corporate guarantee from another Aditya Birla Group firm for its ₹35,000-crore debt plan, according to reports from Mint. The demands underscore banks' insistence on stronger safeguards before extending one of the sector's biggest loans. As reported by Mint, the corporate guarantee from a parent or strong group company acts as a backstop and protects lenders in case of default. The earlier business projections made by the company were considered too optimistic and have been tempered to manageable levels. Bankers are still discussing the loan proposal, and no concrete decision has yet been taken, as reported by sources familiar with the development.
This fresh debt will allow Vodafone Idea to execute its ₹45,000-crore capital expenditure to upgrade its network infrastructure, as reported by Mint. According to a third person in the know, State Bank of India's investment banking subsidiary SBI Capital Markets is working on the proposal that includes ₹10,000 crore in non-funded debt. The company had lost 5.4 million users as of March end from 198.2 million a year ago, but managed to stabilize its subscriber base at 192.8 million in the quarter ended March. The corporate guarantee (from an Aditya Birla Group group peer) is necessary for this loan, said one of the people aware of the development. Issued by a parent or a strong group company, a corporate guarantee acts like a backstop and protects lenders in the case of a default.
Beyond the network expansion, Vodafone Idea faces significant financial obligations including ₹49,000 crore towards spectrum dues over the next three years, which would take its cumulative outgo to nearly ₹1 trillion, according to Mint reports. The amount also includes ₹5,000-6,000 crore interest on the bank debt once the company arranges that funding. In May, the government lowered its adjusted gross revenue (AGR) dues by ₹23,600 crore to ₹64,046 crore after recalculation, deferring bulk of its payments by 10 years to be paid from FY36 to FY41. The company has bank debt of ₹726 crore, according to Icra. However, analysts at Macquarie noted there is no quick fix to Vi's underlying fundamental challenges, while IIFL Capital said the promoter infusion is unlikely to provide cash flow relief but improves the company's debt-raising prospects.
In May, Crisil Ratings assigned an A- rating to the ₹35,000-crore proposed bank facilities of Vodafone Idea, while Icra upgraded its existing term loans by two notches to A- in June, as reported by Mint. Icra said the rating upgrade is driven by a change in rating approach, wherein the entity's rating factors in support from the Aditya Birla Group. The company has bank debt of ₹726 crore, according to Icra. This, it said, has further strengthened with the re-appointment of Kumar Mangalam Birla as the non-executive chairman of the board and with the proposed equity infusion of around ₹4,730 crore through a preferential allotment of warrants to a promoter group entity in May 2026. The promoters the Aditya Birla Group and Vodafone Plc own total 25.6% in Vodafone Idea, with Aditya Birla Group holding 9.57% end March.
