Bankers: Govt’s Increased Stake in Vi Not Enough to Lend to Telco

Centre’s decision to raise its stake in the debt-ridden Vodafone Idea is still not enough for them to lend to the telco, bankers said.

On March 29, the telecom company announced that the government would convert ₹36,950 crore of its spectrum auction dues into equity, thereby increasing the government's shareholding in the company from 22.6% to 48.99%.

Several bankers said that the government's decision to increase its stake in Vi is a positive development, but it’s not enough for them to turn on the funding taps. Economic Times reported. Bankers added that equity conversion covers dues only till September, which is just 15% of the total debt.

Until and unless the government provides a clear framework for handling the utilisation of dues, the company and its lenders remain on a “knife edge.” This makes the disbursement of fresh loans difficult.

On April 1, Vodafone Idea shares surged by 20%.

A banker told ET, Vodafone Idea’s debt problem is no longer a banking issue but a government one. The government has to ensure it keeps going to avoid the fall of the crucial telecom sector into a duopoly with very little control.

As of December 2024, Vodafone Idea's total debt stands at ₹2.3 lakh crore.