Shares in the Indian telco have plummeted as the operator scrambles to raise the funds it needs to pay the government

Late last month, the Indian Supreme Court rejected calls from Bharti Airtel and Vi to recalculate the amounts due the government as a result of adjusted gross revenue (AGR) fees. Now, with a batch of repayments imminent, Vi is struggling to survive, with both of its parent companies, Aditya Birla Group and Vodafone Group, loathe to inject more funds into a potentially sinking ship. 
The company is facing a roughly $3 billion shortfall in cash flows for FY2023 as a result of AGR, spectrum dues, and interest costs. 
Recent attempts to raise funds have seemingly failed. Vi was initially in talks with an Oak Hill-led consortium to raise $1 billion, but these discussions faltered at the start of 2021. More recently, in early July, the operator was rumoured to be in discussions with US investment fund Apollo Global, aiming to raise $3 billion, potentially through the sale of a “sizeable stake” in the company. However, almost a month has passed and no deal has been announced. 
Now, following the decision from the Supreme Court, it has been reiterated – and not for the first time – that the operator’s parent companies have no interest in investing additional funds in the company. 
Speaking shortly after the decision was made, Vodafone Group’s CEO said once again that they will not be reinvesting in India.
“We, as a group, try to provide them as much practical support as we can, but I want to make it very clear, we are not putting any additional equity into India,” said CEO Nick Read.
Similarly, the other major stakeholder, Aditya Birla Group, has said that it is unable to supply further funding. In fact, yesterday it became apparent that, back in June (notably predating the Supreme Court decision), it had instead offered to sell the entirety of its 27.66% stake in the business to any public sector or domestic financial entity.
“It is with a sense of duty towards the 270 million Indians connected by Vodafone Idea, I am more than willing to hand over my stake in the company to any entity—public sector/government/domestic financial entity or any other that the government may consider worthy of keeping the company as a going concern,” read a letter from chairman Kumar Mangalam Birla to cabinet secretary Rajiv Gauba back in June.
While the government has yet to give an official response to Birla’s proposition, it is instead in the process of preparing a relief package for the telecoms industry.
“The telecom department is firming up a relief package to allow surrender of spectrum, reduce bank guarantees, phase out levies and prospectively define AGR to provide relief to the sector as well as Vodafone Idea,” said a government official, noting that the announcement was likely by the end of the month.
While this will surely be welcomed by Vi and Indian telecoms market at large, the reality is that this package may well be a case of too little too late for Vi.
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