Vodafone Idea is in talks with the State Bank of India (SBI) for fresh loans, in a deal that could lead the way for other lenders to offer credit and boost survival chances of the troubled telco.
The SBI has asked Vodafone Idea to first sketch a turnaround strategy. The state-owned lender has also asked the telco to present a comprehensive plan on its financial viability, which includes the company's cash conservation plans, roadmap to return to profits, equity infusion from the largest stakeholders, and tariff outlook, sources told Bloomberg.
Vodafone Idea is formulating the said information for the SBI. Discussions are still underway, however, there is no certainty if the company will get this funding.
The loan, if it concretises, will prove to be a lifeline for Vodafone Idea which hasn't reported an annual profit since Reliance Jio Infocomm Ltd unleashed a tariff war in 2016 and has been losing out on subscribers to bigger adversaries in the past year.
Vodafone Idea, a joint venture between Vodafone and billionaire Kumar Mangalam Birla's conglomerate, survived a potential bankruptcy after the government gave more time to telcos to pay their dues.
This will stamp out some of the bank guarantees Vodafone Idea gave to the government, allowing the banks more flexibility to extend credit, a source told the news agency.
Vodafone Idea's overall debt stood at Rs 1.9 lakh crore as of June end, comprising 1.68 lakh crore owed to the government and the rest of the amount to lenders, as per a September 15 note from brokerage JM Financial.
SBI has the highest exposure to the telco among other lenders, according to sources.
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