Vodafone Idea seeks lenders' NOC to monetise fibre for Rs 7,000-Cr capex push

MUMBAI: Vodafone Idea (Vi) has sought a no-objection certificate (NOC) from lenders led by State Bank of India (SBI) to pledge its fibre optic network as it looks to raise nearly Rs 7,000 crore from private credit or non-banking sources in a fresh bid to fund capital expenditure.

An NOC from banks is essential to raise debt against dedicated security. A go-ahead from lenders is the first step for the debt-laden telecom operator to secure fresh funding. However, this will not give new lenders priority over existing bank debt, people aware of the matter said.

"Vi has formally approached banks for an NOC. Broadly, the company wants to raise funds for capex, and since cheaper funds from banks are not available, it is exploring alternate sources such as private credit funds which lend at double-digit rates," said a person familiar with the development.

Vi operates a 315,000 km optical fibre network, about half of which is self-built while the rest is outsourced to third-party vendors. The company has made several attempts over the past six years to monetise its fibre assets through private equity players and US-based infrastructure funds. In 2023, its pan-India fibre network was valued at Rs 10,000-11,500 crore, while in-building solutions were pegged at Rs 500 crore, ET had reported.

Banks have remained cautious about extending further credit to Vi, given that most of its liabilities are dues to the government. Vi's total debt, largely comprising deferred spectrum payments and adjusted gross revenue (AGR) liabilities, currently stands at around Rs 2 lakh crore.

"Until a viable solution is found for these government dues, bank funding is unlikely. But the company needs funds for capex as it is falling behind rivals, so it has to arrange resources quickly," said the person cited above. SBI, the lead lender, did not respond to ET's email.


Debt funding is crucial for Vi to sustain network investments, as its equity raise of over Rs 20,000 crore in April 2024 is expected to be nearly exhausted by the end of this month. The company has rolled out 5G services in 22 cities and aims to cover all 17 circles by September 2025. Adoption has been strong, and Vi expects to maintain the trend of improving 4G/5G subscriber mix.

The four-year moratorium on AGR payments granted in 2021 ends this September, with annual payments due from March 2026. The first instalment is projected at Rs 16,428 crore, followed by six equal annual tranches until FY31, according to filings. Vi's total AGR liability alone is estimated at Rs 75,000 crore.

"The company's plans shared with credit funds assume a 10-year moratorium on government dues. It projects earnings of Rs 30,000 crore by FY27, or a 40% rise from current levels, which looks ambitious. Still, it expects to manage interest outgo if it secures a longer moratorium," said a second person aware of the matter. Vi did not reply to ET's email seeking comment.

Analysts said Vi may also benefit from a likely tariff hike by Reliance Jio ahead of its planned IPO in the first half of 2026, giving it room to increase its own rates. The government, they added, is unlikely to let Vi fail, as a duopoly in India's large telecom market could be problematic.

Vi CEO Akshaya Moondra recently said the company was seeking non-banking funding to keep its capex cycle going as lenders await clarity on the AGR issue.

"What the banks are currently looking for is clarity on AGR. Our request to the government has been to resolve this ahead of the March deadline, so banks get clarity and we can proceed with funding. That remains our effort today," Moondra had said. Over the years, Vi has focussed on clearing bank debt, which currently stands at Rs 1,945 crore.