NEW DELHI, Sept 22 (Reuters) - India’s Vodafone Idea is confident it can reach a fundraising deal with potential investors, bolstered by a federal government package that provides much-needed relief to the debt-ridden mobile carrier, its chief executive officer said on Wednesday.
Vodafone Idea, with a net debt of 1.91 trillion rupees ($25.86 billion) and other government dues of 1.68 trillion rupees, had expressed repeated concerns about its ability to stay afloat without federal help.
Investors were waiting to see whether New Delhi would ensure that at least three players exist in the telecoms sector and also wanted the funding to be used for business rather than paying government dues, Ravinder Takkar, the CEO of Vodafone Idea, said in a video interview.
“With this package all of those fears to some extent have been put aside,” said Takkar, without specifying the names of investors the company was in talks with or a timeline for the fundraising.
“With this tremendous change our business plans will have to be updated, which means our funding requirements will also have to be updated.” Prime Minister Narendra Modi’s government last week approved a relief package for India’s cash-strapped telecoms sector, including a four-year moratorium on airwaves fees due to the state.
India’s telecoms sector ran into trouble in late 2016 with the entry of tycoon billionaire Mukesh Ambani’s Reliance Jio, which sparked a price war that forced some rivals out of the market and turned profits into losses.
A Supreme Court ruling in late 2019 also added to the sector’s pain, saddling telecoms companies with dues of roughly $13 billion.
The government’s latest measures are expected to ease some of that pain, boost the growth of telecoms firms in the world’s second-biggest wireless market by number of users, and give a fresh lease of life to Vodafone Idea.
“There should be no doubt that... Vodafone Idea will exist, we will compete, we will survive, we will thrive,” said Takkar.
(Reporting by Sankalp Phartiyal, Editing by Louise Heavens)