Vodafone Group Plc and Aditya Birla Group may dilute their stake in Vodafone Idea Limited (VIL) if a strategic investor shows interest in taking control of the debt-laden telco, Hindustan Times reported citing two people familiar with the internal discussions.

UK-based Vodafone Group Plc holds a 45% stake in the company while the Indian promoter group comprising Kumar Manglam Birla and Aditya Birla Group companies holds a 26% stake.

“The two promoter groups are open to the option of doing away with a majority stake or transfer control,” the first person informed the publication and added that this option will be considered only if the foreign investors agree to pay a premium over Vodafone Idea’s current market price so that the company gets adequate funding to repay the telco’s dues.

The new development contrasts the initial plans of VIL’s promoters, who were looking to raise funds by bringing in financial investors. But even after several rounds, the fundraising has not been successful, putting a question mark on the telco’s survival.

“The initial plan was to get an investor in and, alongside, the two promoters would have invested some more equity, but that plan has not worked out so far,” one of the two people cited above was quoted as saying.

The two promoter groups are reportedly holding discussions with at least five investors, including strategic and financial, to sell a combination of VIL shares and convertibles to raise money for the cash-starved telco.

The loss-making telco needs to pay Rs 22,500 crore between December 2021 and April 2022 towards debt payments, adjusted gross revenue (AGR) related dues, and spectrum allocation.

SC’s Friday order will hit Vi the most when it is still hunting for investors to bring in Rs 25,000 crore of much needed funds. The latest verdict will now raise questions of the third largest telco’s survival.

Its cash balance stood at Rs 350 crore on March 31, 2021, and VIL announced a loss of Rs 6,985.1 crore for the quarter ended March.ET recently reported that VIL has started discussions with US private equity (PE) group Apollo Global Management to raise up to $3 billion (Rs 22,400 crore) over the next three months through a mix of debt and equity to pay major upcoming dues.

It also expects to raise up to $1 billion (around Rs 7,400 crore) from the sale of its fixed-line broadband subsidiary, optic fibre unit and data centres business, as it seeks to ease its cash crunch.

The Supreme Court Friday last week dismissed pleas of VIL and Airtel seeking correction of what they called arithmetic errors in their AGR dues calculated by the telecom department.

The third-largest telecom operator needs to pay AGR dues of Rs 58,254 crore while it has self-assessed the amount at Rs 21,533 crore.

The telco has paid only Rs 7,854 crore and needs to clear the rest in 10 annual installments through March 31, 2031.

Given its inability to push through a significant tariff hike in a fiercely competitive telecom market, the cash-strapped telco may find it tough to survive beyond next April without a major relief package from the government, they said.

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