Vodafone Idea (Vi), the debt-laden Indian telecom operator, is reportedly in discussions with US private equity firm Tillman Global Holdings (TGH) for a potential investment of $4-6 billion. This investment could provide a crucial lifeline for the struggling telecom operator.
The New York-based investment firm's proposal involves a comprehensive package that hinges on the Indian government restructuring Vi's liabilities, which include adjusted gross revenue (AGR) and spectrum dues. Sources indicate that TGH is not seeking a complete waiver of these dues but rather a restructuring plan that would provide the company with financial breathing room.
If the deal materializes, TGH is expected to assume promoter status and operational control of Vodafone Idea from the existing promoters, the Aditya Birla Group and UK's Vodafone. Sanjiv Ahuja, Chairman and CEO of TGH, is credited with the turnaround of French telecom giant Orange during 2003-2007, bringing valuable expertise to the table.
Vodafone Idea, India's third-largest telecom operator, has been burdened by debt exceeding ₹2.1 lakh crore. Despite the government converting part of its dues into equity, making it the single largest shareholder with a 33% stake, the company has faced liquidity challenges, subscriber losses, and delays in its 5G rollout. The potential investment from TGH could enable Vi to accelerate network upgrades, expand 4G coverage, and launch 5G services to compete effectively with Reliance Jio and Bharti Airtel.
TGH's proposal includes a detailed plan submitted to the government, linking the investment to the restructuring of Vi's liabilities. The firm's investment is conditional on the government's approval of the restructuring package. The restructuring package sought by the firm would be conditioned on its investment and its investment would be conditioned on the waiver package.
Vodafone Idea has been exploring various fundraising options to alleviate its financial strain. Last year, the company raised ₹24,000 crore through a mix of follow-on and preferential share issues, but this has not been sufficient to resolve its financial difficulties. The company has also been unable to raise the planned ₹25,000 crore in debt.
The potential investment from TGH could be a make-or-break moment for Vodafone Idea. The deal would mark one of the largest foreign private equity investments in India's telecom sector. However, the deal's success hinges on the government's willingness to provide a comprehensive package covering all of Vi's liabilities. The government is contemplating offering limited relief to Vodafone Idea regarding its additional adjusted gross revenue (AGR) dues. The potential relief focuses on reviewing possible duplicate entries and calculation errors in the Rs 9,450-crore additional demand for the period up to FY 2017.
