Cash-strapped Indian telco Vodafone Idea, rebranded as Vi, is planning to ease its financial woes by selling its fixed-line broadband subsidiary, optic fibre unit, and data centres business.
According to a report in Economic Times and other local media, the debt-laden operator urgently needs funding to ease its cash crunch and meet its upcoming liabilities.
The report said that the telco is planning to raise USD 1 billion by selling assets. Vi needs cash desperately to keep on functioning and be able to compete with its rivals, Reliance Jio and Bharti Airtel. Just in between December 2021 and March 2022, the telco will have to shell out INR 22,500 crore (USD 3 billion) for spectrum-related dues and adjusted gross revenue (AGR) dues.
Vodafone Idea has one data center in Navi Mumbai and around 160,000 km of optic fibre. Also, its fixed-line broadband business is housed under a subsidiary, You Broadband.
The sale of broadband, optic fibre, and data centre assets may take the form of a “sale and leaseback model” with the valuation depending on the tenure of the lease arrangement with a potential buyer and how much it pays monthly rent for the lease. However, according to reports, investors are not very keen on the price points that Vi proposed.
The company has spent the last few months on unsuccessful fundraising, despite several rounds of discussions with potential investors.
UK’s Vodafone Group Plc and Aditya Birla Group told the telecom department about its financial struggles in a letter. It wrote to the department of telecom (DoT) on 25th June, notifying the department of its financial struggles. The primary objective of the letter was to seek another year of a moratorium on its spectrum dues.