Vodafone Idea shares in focus as telco seeks $2.9 billion loan to boost network

Shares of Vodafone Idea are likely to be in focus on Thursday following a Bloomberg report that the telecom operator is in talks to raise about Rs 25,000 crore ($2.9 billion) in loans to strengthen its network and better compete with rivals.

According to the report, the State Bank of India is expected to lead a consortium of lenders. The proposed loan is likely to be a mix of domestic and foreign borrowings with a tenor of around 10 years, said people familiar with the matter, who requested anonymity.

Also Read: HDB Financial Services IPO: Should you subscribe? Here’s what brokerages say

Vodafone Idea, backed by billionaire Kumar Mangalam Birla, had previously delayed its fund-raising plan due to banks’ concerns over its financial health and pending dues to the government.However, the company has revived its efforts amid reports that the Indian government may offer relief on outstanding dues. The urgency has grown as subscribers continue to migrate to larger rivals like Reliance Jio and Bharti Airtel.

A successful loan deal would help Vodafone Idea fund capital expenditure and accelerate its network rollout, potentially aiding efforts to regain market share.
Also Read: These 10 multibagger penny stocks surged 200-570% in last 1 year. Do you own any?

In April, the government increased its stake in the loss-making telecom operator to 48.99% after converting a portion of spectrum-related dues into equity. Vodafone Idea declined to comment on the fund-raising, while the State Bank of India did not immediately respond to Bloomberg’s queries.Global banks are also expected to participate in the consortium, with the funding round likely to conclude within a year, the report added.

Responding to recent media reports, Vodafone Idea said on June 24 that it had not received any official communication regarding relief on dues. In May, the company’s board approved plans to raise Rs 20,000 crore through a mix of equity and debt.

Share price target and performance

According to Trendlyne, the average target price for Vodafone Idea stands at Rs 8, implying a potential upside of around 6% from current levels. Out of the 22 analysts tracking the stock, most have a ‘Sell’ rating.

Shares of Vodafone Idea closed 3.8% higher at Rs 7.13 on the BSE in the previous session. The stock is down 59% over the past 12 months and 11% so far this year.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)