Kumar Mangalam Birla may infuse his own capital into Vodafone Idea

Aditya Birla Group chairman Kumar Mangalam Birla is considering infusing some of his own capital into Vodafone Idea while the Vodafone Group may sell at least a part of its stake in tower firm - Indus Towers - and channel the proceeds into the loss-making telco. This will be followed by external funding, say people aware of the matter.

"Much of the funds will have to come in from external sources. KM Birla will put in some money, but not a significant sum while Vodafone is unlikely to pump in more money (from the UK group). Monetising the assets in Indus is really the plan," said a senior official close to the Vodafone Group.

"Clearly, investors want both the promoters to put their money where their mouth is. It is only after that that external fund-raising will happen," the official added.


Relief Package a Game Changer
Another person familiar with the matter said that the promoter infusion is likely to be much lesser than ₹10,000 crore that has been reported in some media.

ET's query to the Aditya Birla Group (ABG) and Vodafone India did not elicit a response. The Vodafone Group declined comment.

At present, UK's Vodafone Group Plc and the Aditya Birla Group own 44.39% and 27.66%, respectively, in Vodafone Idea as its co-promoters. The Vodafone Group owns 28.12% in Indus Towers.

For about a year, the cash-strapped telco has been in discussions with a slew of potential investors. But it hasn't been able to close its planned ₹25,000 crore fundraise and has blamed unviability of the sector as the main reason.

However, the government's relief package - announced in the middle of September - which includes a four-year moratorium on AGR and spectrum payments, reduced bank guarantees and the option to convert statutory dues to government equity, has changed the game considerably. This has potentially eased Vodafone Idea's immediate cash flow burden, making it attractive for investors, say experts. They added that payment moratorium itself will allow the telco to save around Rs 1 lakh crore annually. Before the package was announced, ABG and the Vodafone Group had refused to put in fresh equity into the telco.

'Mgmt Reviewing Funding Needs'
Vodafone Idea MD Ravinder Takkar recently said the package had changed the ground situation and that he was confident that the carrier's promoters will continue to support the telco, like in the past. He added the company's management is now re-evaluating its funding requirements afresh and will take a fresh proposal to the board soon.

Analysts say the telco needs an immediate cash infusion and tariff hikes to back up the positive impact of the package to be able to compete in the market and revive its business. "This (the package) solves nearly 80% of its next two year's problems. It (Vi) still needs a capital infusion to address cumulative liabilities of around ₹12,000 crore over FY22-23E. Of this, ₹6,400 crore is towards NCDrepayments in FY22, starting December 2021, and ₹4,900 crore in FY23," Motilal Oswal said in a report.