Vodafone Idea aims for $2.9 billion in loans to bolster network

Vodafone Idea Ltd. is talking to lenders to borrow about 250 billion rupees ($2.9 billion) in loans to bolster its network and compete better with large rivals, according to people familiar with the matter.

The State Bank of India will likely lead a consortium of lenders, said the people who did not want to be named as the matter is private, adding the debt is expected to be a mix of domestic and foreign loans with a tenor of about 10 years.

The billionaire Kumar Mangalam Birla-led wireless carrier had to earlier defer the plan as banks were concerned about the firm’s weak finances and mounting dues to the government.

The renewed efforts come amid reports that India is considering relief to wireless carriers on their dues. They have taken on more urgency as subscribers leave the carrier for larger rivals like Reliance Jio Infocomm Ltd and Bharti Airtel Ltd.

A successful loan raise would help Vodafone Idea fund its capital expenditure and roll out a speedier network as it looks to reclaim market share.

In April, the government had increased its stake in the money-losing carrier to 48.99% after converting a part of its spectrum payment dues into equity. A representative of Vodafone Idea declined to comment while State Bank of India did not immediately respond to Bloomberg’s email seeking comments.

Global banks too are expected to join the consortium, the people said, adding that the fund raising drive would be concluded in an year.

In response to media reports suggesting relief on outstanding federal dues, Vodafone Idea said on June 24 that it had not received any official communication from the government. In May, the company’s board had approved raising of 200 billion rupees through equity or loans.