Vodafone Idea (Vi) would like to issue bonds worth Rs 1600 crore to the American Tower Company (ATC). Previously, Vi had optionally issued convertible bonds (OCDs) to ATC, but was unable to do so because one of the terms of the OCD issuance was that the government convert dues into equity. But the Indian government has not yet done so and will not do so as long as the promoters of the telco do not bring in additional capital. In a recent registration filing, Vodafone Idea said its board will meet on January 31, 2023 to discuss the preferential issue of OCDs over ATC.
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Vodafone idea is in a desperate situation as the telco doesn’t have enough money to keep going for long. It needs the OCD issue to continue as well as the government to convert dues. The promoters of the telco are willing to put in more capital, but it has to be a significant amount or the government wouldn’t go ahead and do its part to get equity into the company.
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Vi is currently trying to improve the customer experience by offering them faster internet speeds with a 4G network. But that won’t be enough if the other telcos offer 5G speeds at the expense of 4G. For Vi, there are no concrete plans to launch 5G yet. The telco would not be able to issue commercial orders for 5G equipment until it can arrange financing. But to get financing, the initiators first have to move and then the government has to convert the contribution into equity. In the current situation, it will be very difficult for Vi to sustain for a long time.
