Mounting stress: Vodafone Idea seeks debt restructuring

Vodafone idea, which is reeling under $14-billion net debt, mounting losses and dwindling subscribers, has approached creditors for better payment terms to revive the company, people with direct knowledge of the matter said.

Vodafone Idea, formed by last year’s merger of the British telecom firm’s local unit with Idea Cellular, has warned lenders that it won’t be able to honour its commitments for long under current conditions, the people said, asking not to be named as the discussions are private. One of its requests was a temporary halt to loan payments, although no formal proposal has been made, two of the people said.

A Vodafone Idea spokesman said the company hasn’t asked lenders to rework payment terms and the carrier continues to pay all its debts as and when they fall due.

“The financial stress in the telecom sector is well acknowledged and all telecom operators have asked for requisite help in reducing it,” the firm said in the statement.

A spokesman for the Newbury, UK-based Vodafone Group pointed to a filing by the India venture in July that stated Vodafone Idea had been in discussions with lenders for some waivers in the prior quarter. He didn’t comment further.

The distress at India’s No. 2 phone operator deepened last week after the nation’s top court ordered it to pay about $4 billion in past dues, dealing a fresh blow to the struggling business. Vodafone Idea has been losing subscribers and reporting losses every quarter since the two partners announced their merger in 2017, while the entry of billionaire Mukesh Ambani’s wireless provider Reliance Jio Infocomm a year earlier with free calls and cheap data added to the venture’s woes.

Vodafone Idea’s shares fell 1% to Rs 3.81, a record low, in Mumbai on Wednesday.

IDEA Cellular Limited