SBI-led group of lenders agree to provide $3.5 billion debt to Vodafone Idea

According to fresh market updates, A group of lenders led by State Bank of India agreed to provide around $3.5 billion of debt financing to Vodafone Idea Ltd. to help the mobile telephone operator rebuild its business, people familiar with the matter stated.

Other local lenders in the consortium include Union Bank of India Ltd. and the National Bank for Financing Infrastructure and Development, the people stated, asking not to be identified because the information isn’t public.

Vodafone Idea, the country’s third-biggest wireless operator in terms of users, plans to use some of the funds to improve its network and better compete with Bharti Airtel Ltd. and Reliance Jio Infocomm Ltd., the people stated.

Conditions regarding the funding include billionaire Kumar Mangalam Birla remaining as chairman throughout the tenure of the loan, which is nearly 10 years, and guarantees of repayment in case of default, the people stated.

Representatives for Vodafone Idea and the banks didn’t immediately respond to requests for comment.

Vodafone Idea has been working on raising debt to get on a firmer footing, with CNBC-TV18 reporting in May that the firm, which is part-owned by the UK’s Vodafone Group Plc, was in talks with lenders and that SBI was likely to lead a consortium. Vodafone Idea noted a smaller-than-anticipated loss of 37.5 billion indian indian rupee terms ($394 million) in the first quarter through June.

Indian authorities earlier this year provided Vodafone Idea with a lifeline and better chance to attract market participants by capping its past spectrum payouts. The government additionally last year converted around 370 billion indian indian rupee terms of outstanding dues into equity, lifting its stake to 48.99% from 22.6%.

The moves have helped Vodafone Idea’s shares, which have advanced almost 40% this year to give the firm a market capitalization of 1.6 trillion indian indian rupee terms.