Oaktree, Varde propose up to $2.5 billion investment in Vodafone Idea

A consortium led by US-based Oaktree Capital, including a few other private equity firms such as Varde Partners, has proposed investing up to $2.5 billion into cash-strapped Vodafone Idea Ltd through hybrid debt papers, sources aware of the matter said.

The consortium is said to have offered $2.0-2.5 billion of capital to the Birla group company that faces tens of billions of rupees in government debt.

Vodafone Idea had in September announced raising funds to the tune of ₹25,000 crore, through debt and by selling shares, even as it continues to lose millions of wireless users every month in an extremely competitive market. The process of fundraising is yet to start.

The telco has also been in talks with other potential investors to raise funds amid mounting losses and shrinking revenues. Mint had in September reported Amazon.com Inc. and Verizon Communications, the largest wireless carrier in the US, were to resume talks to buy a significant stake in Vodafone Idea for more than $4 billion.

The dialogue between Vodafone Idea and investors was paused as the telco first wanted clarity from the Supreme Court on staggered payment of adjusted gross revenue (AGR)-related dues that could have threatened the survival of the telecom operator.

On 1 September, the top court gave telecom operators ten years to pay off their AGR dues including interest, penalty and interest on penalty. The court directed telcos to make an upfront payment of 10% of their total AGR dues by 31 March, and clear the remaining debt in ten annual and equal instalments starting 1 April, 2021.

Vodafone Idea has paid ₹7,854 in AGR dues, but still owes more than ₹50,000 crore to the department of telecommunications.

At 0235 pm, shares of Vodafone Idea were up 0.4% at ₹9.24, while the benchmark Sensex fell more than 1% to 43,654.78 points. The stock had risen as much as 4.4% earlier in the day.

Source: Mint