Vodafone Idea had previously said it aimed to launch its 5G network in India later this year.
Vodafone Idea, India’s third-largest telecoms operator, plans to raise 230 billion Indian rupees ($2.75 billion) in long-term loans and obtain bank guarantees for another 100 billion Indian rupees, the Securities and Exchange Board of India reported. Economic Times.
With the funds, the company aims to expand its 4G coverage and roll out 5G to gain an edge in the race against rival operators Bharti Airtl and Reliance Jio Infocomm.
Both Reliance Jio and Bharti Airtel have already rolled out 5G networks across India.
Vodafone Idea stressed that while the 5G rollout is important, expanding and strengthening current 4G coverage is its top priority.
Vodafone Idea, a joint venture between Vodafone and the Aditya Birla Group, submitted a loan proposal to a State Bank of India (SBI)-led consortium of banks a few days ago with the primary objective of raising funds for upgradation of mobile broadband network infrastructure in 17 priority markets across the country.
The report noted that the bank will also seek a techno-economic viability (TEV) report from a leading consultancy firm to assess Vodafone Idea’s creditworthiness before taking a decision on the issue.
News reports also highlighted that some banks remain cautious about increasing their exposure to Vodafone Idea due to outstanding payments to the Indian government and fierce competition in the Indian telecom sector.
Vodafone Idea recently completed a $2.16 billion follow-on public offering (FPO), raising around $648.5 million from 74 anchor investors. Vodafone Idea recently said it plans to use the equity and debt funding to roll out 5G services across India within six to seven months of securing funding. It is also seeking funds to strengthen its 4G network and pay tower vendors.
Vodafone Idea CEO Akshaya Moondra recently told a local newspaper Economic Times The telco will not use the FPO proceeds to repay debts to vendors.
“FPO proceeds are not used to make payments to promoters or promoter group companies. So, only a maximum of around 17% of FPO proceeds is used for general corporate purposes. We use this in the best interest of the business and it can also be used for capital expenditure. Broadly, we want to pay vendors with the cash flows generated from the business over a period of time,” Moondra said.
Swedish vendor Ericsson recently confirmed that it is in talks with Vodafone Idea to win new orders for 4G and 5G equipment, and recent reports have suggested that Vodafone Idea is also in talks with Finnish vendor Nokia.
