Vodafone Idea board to mull issuing convertible debentures to a vendor

The board of Vodafone Idea (Vi) will meet on Friday to discuss the issue of convertible debentures to a vendor.

Vi has informed the stock exchange that its board will meet to evaluate issue of debentures that can be converted into equity shares on a preferential or a private allotment basis. The issue of debentures will be subject to approvals from regulators and shareholders.

The development comes within 20 days of Indus Towers warning the financially stressed telecom company. Vi did not disclose further details about the proposal.

Vi has struggled to raise funds and that has hindered its payments to vendors and launch of a 5G service. The conversion of interest on adjusted gross revenue dues into equity for the government too has not materialized yet.

Last month Indus Towers warned Vi to pay up its dues by November or face disconnection. Vi’s dues with Indus are said to be over Rs 7,000 crore and the tower company recently made a provision in its books considering recovery challenges.

It reportedly owes Rs 2,000 crore to American Tower Corporation. At that time Vi said it is in ongoing discussions with Indus Towers for softer payment terms. Vi had earlier suggested that it would make a part payment till December and 100 per cent thereafter along with clearance of old dues till July 2023.

Rival firms Bharti Airtel and Reliance Jio have begun rolling out their 5G services. Vi, however, is yet to finalise contracts with telecom gear makers Ericsson and Nokia for 5G network equipment and this delay makes it more vulnerable in the highly competitive telecom market. Vi which lost over 15 million subscribers in twelve months ending June continues to see high customer churn.

Vi’s chief executive officer Akshaya Moondra told shareholders in August that the company will launch 5G service after finalizing fresh funding and contracts with gear makers. Vi acquired 6228 MHz of spectrum in various bands worth Rs 18,799 crore in the recent 5G spectrum auction.

Vi acquired 6228 MHz of spectrum in various bands worth Rs 18,799 crore in the recent 5G spectrum auction. It purchased spectrum in the 3300 MHz band in 17 of its priority circles and in the 26 GHz band in 16 circles enabling last-mile connectivity.

Vi stock closed at Rs 8.52 on the BSE on Thursday gaining 0.6 per cent.