Vodafone Idea ‘repays’ significant chunk of Rs 4,300 crore loans
The repayments will help the telecom market leader reduce its net finance costs and free up capital.
The repayments will help the telecom market leader reduce its net finance costs and free up capital for expanding its 4G network to combat Reliance Jio Infocomm and Bharti Airtel, analysts said.
Vodafone Idea is learnt to have concluded repayment of three rupee-denominated domestic loans — Rs 300 crore to Axis Bank and an aggregate of Rs 3,210 crore to State Bank of India. The repayments to SBI include a Rs 3,042.8 crore short-term loan cleared as a ‘bullet repayment’ following the rights issue and the first Rs 167 crore instalment of a Rs 5,000 crore long-term loan, one of the people told ET.
The operator is understood to have repaid the first Rs 55 crore tranche of a Rs 275.5 crore foreign currency loan to Export Development Canada.
Vodafone Idea is likely to shortly repay the first $4.75 million (Rs 33 crore) instalment of a Rs 190.2-crore long-term loan to Japan’s MUFG Bank and the initial Rs 37.2 crore instalment of a Rs 297.6 crore long-term loan to Sumitomo Mitsubishi Banking Corp. “All details of our rights issue use are given in our offer document and we will follow that,” a Vodafone Idea spokesperson told ET.
Emails sent to SBI and EDC remained unanswered until publication of this report. Axis Bank and MUFG declined to comment on the matter. SMBC could not be reached immediately for comment. Voda Idea shares gained 0.2% to Rs 11.75 at the close on the BSE on Monday.
Brokerage Kotak Institutional Equities estimates Voda Idea’s “net finance costs will drop almost 13% sequentially in the June quarter, FY20, to Rs 2,429.4 crore, on account of a lower debt balance, post the rights issue.”
In the quarter ended March 2019, Voda Idea’s net interest and financing costs rose 7% sequentially to Rs 2,789.4 crore, choking its earnings. The telco’s net debt stood at Rs 1.18 lakh crore in March.
The telco had said the rights issue proceeds would be used to repay debt, including spectrum dues worth Rs 18,674.79 crore, and general corporate expenses.
Roughly Rs 11,960 crore will go towards deferred spectrum payments and Rs 4,267.2 crore for bank loan repayments in FY20. A portion will be used for redemption and payment of interest on non-convertible debentures issued in October 2012.
Voda Idea lags rivals Jio & Airtel in terms of 4G coverage and is using the rights issue proceeds to pare its debt. The company has earmarked Rs 27,000 crore of capex for FY19 and FY20, of which Rs 7,000 crore had been spent by December.