Kumar Mangalam Birla could inject funds into Vodafone Idea

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Kumar Mangalam Birla could inject funds into Vodafone Idea

Highlights

  • KM Birla had stepped down as chairman of Vi, but had struggled to convince the government of a telecommunications aid plan, which could help the company manage its cash flow.
  • The Vodafone Group owns 45% of Vodafone Idea, and the Indian Promoter Group, which includes the companies Kumar Mangalam Birla and Aditya Birla Group, holds a 26% stake
  • Vodafone Idea’s gross liabilities, including regulatory dues, amounted to approximately Rs 1.9 trillion as of March 31.

New Delhi: Kumar Mangalam Birla, chairman of the Aditya Birla group, plans to inject a token sum of less than Rs 1,000 crore into Vodafone Idea, in return for the Centre’s reform program which was largely aimed at reviving the struggling telecommunications sector .

“A large part of the funds will have to come from external sources. KM Birla will invest the money, but not a large amount, while Vodafone will probably not inject more (of the UK group). Monetizing the assets in Indus is really the key. plan, ”a senior official close to the Vodafone group told Economic Times.

KM Birla had stepped down as chairman of Vi, but had struggled to convince the government of a telecommunications aid plan, which could help the company manage its cash flow.

However, it is likely that the Vodafone Group will sell part of its stake in Indus Towers – and channel the proceeds to the loss-making telecommunications company.

“Obviously, investors want the two promoters to put their money where they say it is. Only after an external fundraiser takes place,” the official added.

The Vodafone Group owns 45% of Vodafone Idea, and the Indian Promoter Group, which includes the companies Kumar Mangalam Birla and Aditya Birla Group, holds a 26% stake.

The current market valuation of Vodafone Idea is Rs 31,000 crore. The telephone company must repay Rs 9,000 crore in loans to banks before the end of this fiscal year, including Rs 5,000 crore in non-convertible debentures.

Vodafone Idea’s gross liabilities, including regulatory dues, amounted to approximately Rs 1.9 trillion as of March 31.

The company owes a total of Rs 48,000 crore to eight banks, run by the State Bank of India. Of this amount, loans amount to Rs 23,000 crore, and the remainder is in the form of bank guarantees.

Bankers estimate Vodafone Idea’s annual debt repayment at around 6,000 crore over the next two years. In addition, after the four-year vacation ends, payments to lenders and the government are also expected to increase sharply.

Vodafone Idea has continuously recorded annual losses after March 2016 since the entry of Reliance Jio from Mukesh Ambani that year. Jio debuted with ultra-low prices, forcing rivals to quit, merge or go bankrupt.

Of all the major companies operating in the telecommunications sector in the country, Vodafone Idea Limited (VIL) is facing the biggest financial crisis and in need of urgent help.

If the government’s telecommunications aid plan is as expected, it could provide $ 1 billion in annual aid to VIL.


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