Vodafone Group Plc is working on a proposal to shore up the capital of its listed Indian affiliate, as the venture seeks to turn over a new leaf after the Indian government cut a bill for outstanding spectrum fees, people with knowledge of the matter said.
The UK telecom company, which owns 19% of Mumbai-listed Vodafone Idea Ltd., is considering transferring part of its shareholding to the Indian company to hold in treasury, the people said. The share transfer would take place in lieu of Vodafone injecting more cash into the Indian business, according to the people.
The move would bolster the balance sheet of loss-making Vodafone Idea and facilitate its current efforts to raise debt, the people said, asking not to be identified because the information is private. Vodafone Idea could then sell down the shares at a later date, giving it additional capital to pay the government dues as well as invest in future growth as it seeks to claw back market share from rivals like Reliance Jio Infocomm Ltd.
Vodafone Idea is in talks with lenders to borrow about 350 billion rupees ($3.7 billion), the people said. CNBC-TV18 reported the debt talks earlier, saying State Bank of India is likely to lead a lending consortium. A majority of the debt will be through term loans, the people said.
The Indian government is Vodafone Idea’s largest shareholder with 49%, while billionaire Kumar Mangalam Birla’s Aditya Birla Group also has a minority stake. Vodafone Idea’s shares have climbed about 68% over the past 12 months, giving the company a market value of $12.9 billion.
Details of the proposal are still being worked out and the structure of a deal could change, the people said. A spokesperson for Vodafone declined to comment, while a representative for Vodafone Idea didn’t immediately respond to queries.
The UK telecom company, which owns 19% of Mumbai-listed Vodafone Idea Ltd., is considering transferring part of its shareholding to the Indian company to hold in treasury, the people said. The share transfer would take place in lieu of Vodafone injecting more cash into the Indian business, according to the people.
The move would bolster the balance sheet of loss-making Vodafone Idea and facilitate its current efforts to raise debt, the people said, asking not to be identified because the information is private. Vodafone Idea could then sell down the shares at a later date, giving it additional capital to pay the government dues as well as invest in future growth as it seeks to claw back market share from rivals like Reliance Jio Infocomm Ltd.
Vodafone Idea is in talks with lenders to borrow about 350 billion rupees ($3.7 billion), the people said. CNBC-TV18 reported the debt talks earlier, saying State Bank of India is likely to lead a lending consortium. A majority of the debt will be through term loans, the people said.
The Indian government is Vodafone Idea’s largest shareholder with 49%, while billionaire Kumar Mangalam Birla’s Aditya Birla Group also has a minority stake. Vodafone Idea’s shares have climbed about 68% over the past 12 months, giving the company a market value of $12.9 billion.
Details of the proposal are still being worked out and the structure of a deal could change, the people said. A spokesperson for Vodafone declined to comment, while a representative for Vodafone Idea didn’t immediately respond to queries.
