Vodafone Idea needs to obtain fresh financing in order to be in a position to launch its 5G network
Indian carrier Vodafone Idea may face financial challenges as lenders are refusing to extend fresh loans to the telecom operator, according to Indian press reports.
The reports noted that the telco had self-imposed December 31 as the deadline for bringing in new investors, adding that plans to raise financing through a mix of debt and equity have not materialized yet.
“Without promoters bringing in fresh capital into the company we have taken a call to abstain from taking fresh exposure in the operator,” a senior banking official was quoted as saying in a BusinessLine report.
The publication added that bankers are “comfortable” with Vodafone Idea’s asset quality but do not want to increase their exposure to the telco, believing that its financials and business operations are not “sustainable for the long haul”.
A Vodafone Idea’s spokesperson said that discussions with potential investors are underway, but refused to provide further details.
For the past three years, the telco has been struggling to raise funds needed to pay its large vendors like Indus and the government, expand its 4G coverage and also invest in its pending 5G rollout to compete with rival carriers Reliance Jio Infocomm and Bharti Airtel, which already cover thousands of cities with 5G technology.
In August, Vodafone Idea successfully tested 5G services using both the 26 GHz and 3.3 GHz bands in Pune, in a bid to meet the minimum rollout obligations stipulated by India’s Department of Telecommunications (DoT).
Vodafone Idea’s CEO Akshaya Moondra previously said during the company’s latest earnings call that the carrier would miss the minimum rollout obligations in 15 out of the 17 telecom circles where it acquired spectrum in the July 2022 5G spectrum auction.
The DoT had laid down the roll out obligations for both the 26 GHz band and the mid-bands, which said that by the end of the first year, a company has to commercially launch service anywhere in each of the three metros – Delhi, Kolkata and Mumbai- and at least in one city in each of the 22 telecom circles.
In June, Vodafone Idea had confirmed “advanced talks” with a number of vendors in order to define its final strategy for the deployment of 5G in India.
In the carrier’s annual report, the telco also said it has concluded device testing of all major OEMs on its upcoming 5G mobile broadband network.
Vodafone Idea has partnered with various OEMs to test the compatibility of available 5G handsets in 5G clusters in the cities of Delhi and Pune. “The company is working towards rolling out 5G for consumers. The deployment will be accelerated subsequent to the consummation of fund raising,” Vodafone Idea previously said.