Confident that funding will take place in coming weeks: Vodafone Idea CEO
Cash-strapped Vodafone Idea (VIL) on Friday said it is in active talks with potential investors for fund raising, asserted that ‘floor price’ remains the “best most preferred” fix for industry’s woes arising from tariff-related issues.
VIL confirmed that it has approached government to extend moratorium on spectrum instalments. The company highlighted that sector’s biggest pain point comes from pricing issues, conceded that tariff hike is “absolutely” essential to revive the sector, which is under stress.
Speaking at analyst call post Q4 earnings announcement, Ravinder Takkar, CEO of Vodafone Idea said, “On fund raising, we are currently in active discussion with potential investors.” Takkar did not give a firm timeline for fund raising – which has been significantly delayed – but emphasised that the company is fully engaged with investors “interest” continues.
Shrugging-off queries on whether VIL had an alternate plan ready if it was unable to raise funds, Takkar insisted, “I don’t think there is any reason to start creating Plan B because funding is not happening. We are confident that funding will take place in the coming weeks.” He said that pricing is the “biggest problem” of the industry, added that floor price remains the “best most preferred” way to fix the issue.
“Pricing is much lower than it needs to be, whereas the consumption that customers overall citizens enjoy is significantly higher than what it used to be several years go,” Takkar said.
In a recent SOS to the Telecom Department, the troubled operator had said it will be “unable to pay the instalment of Rs 8,292 crore due on April 9, 2022” due to “cash being used for payment of AGR (Adjusted Gross Revenue) dues the inability of the operations to generate the required cash in a predatory pricing situation”.
As per the letter to Telecom Secretary on June 25, the company has requested DoT to grant it another year of moratorium to pay this spectrum instalment in April 2023 instead of April 2022. In the letter, VIL has made it clear that “it is almost inevitable” that the company will not be able to pay the said amount in April 2022.
Interestingly, Voda Idea has also mentioned in the letter that while it is working on raising new funding for the last six months “investors are not willing to invest in the company because they believe that unless there is significant improvement in consumer tariffs, the health of the industry will not recover they will incur loss on their investment”.
VIL had reported narrowing of consolidated loss to about Rs 7,023 crore for the quarter ended March 2021, mainly on the strength of cost optimisation. Vodafone Idea had posted a loss of Rs 11,643.5 crore in the same period a year ago.
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