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Vodafone Idea Ltd is in talks with banks to either refinance a portion of its loans or raise fresh debt to repay bondholders, said two officials aware of the matter.

The company needs to repay 6,400 crore to bondholders starting December through March. This is in addition to the 14,000 crore of equity that the promoters are likely to infuse into the company, one of the two officials said, requesting anonymity.

According to Care Ratings, Vodafone Idea has bank facilities worth 37,562 crore and long-term debentures worth 7,500 crore.

On Monday, the company paid principal worth 1,500 crore and 110 crore in interest on its 7.57% unsecured redeemable non-convertible debentures due to banks.

In a stock exchange filing, Vodafone Idea said it paid the principal amount, along with interest for certain debentures. These debentures were due on 13 December, and the payment was made on time on Monday evening, it said, without elaborating.

According to one of the two officials cited above, Vodafone Idea is looking to submit a working capital plan to banks by December end.

The Economic Times reported on Thursday that the telecom company is targeting a fourfold jump in annual capital expenditure to $2 billion from an estimated $500 million currently.

Vodafone Idea has been struggling to raise capital from existing or new investors.

Kumar Mangalam Birla, who recently stepped down as the company’s chairman, and UK’s Vodafone Group Plc together hold close to 70% in Vodafone Idea.

The cash-strapped telco, which was at the cusp of financial insolvency, received a major relief when the government allowed it to defer payments on some government dues for four years. The government has also done away with requirements for multiple bank guarantees, allowing telcos to offer a single bank guarantee for different licensed service areas. In addition, for future spectrum auctions, telcos won’t be required to offer bank guarantees to secure instalment payments, a step that is likely to reduce their debt burden.

Vodafone Idea’s gross liabilities, including regulatory dues, stood at around 1.9 trillion as of 31 March. The company owes a total of 48,000 crore to eight banks led by State Bank of India. Of this, borrowings amount to 23,000 crore, and the rest is in the form of bank guarantees.

According to the latest financial reports, as of 30 September, the company’s total debt is at 1,94,778 crore. The company is scheduled to repay 9,732 crore worth of debt by 30 September 2022.

Care Ratings said in a report on 13 August, “The adequacy of available funds to meet debt obligations remains to be seen. With a negative net worth of the company as of 31 March 2021, there is very limited headroom for Vodafone Idea to incur any capital expenditure and raise funds to support its operations."

The rating agency has a ‘B-’ rating for Vodafone Idea which means credit watch with negative implications.

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