The situation with Vodafone Idea in the telecom industry seems to be growing grimmer with each passing moment. The question looms over the telecom operator whether or not it might go under. If this happens, not only will it be a big hit for the consumers, but the lenders of the company will also be facing the brunt of the collapse. Being a big name in the telecom industry, Vodafone Idea’s lenders include both private and public banks. As such, they have a lot of exposure in the business. To tackle this challenge, the Department of Telecommunications (DoT) is holding meetings with the head of banks to discuss the possible solution for the telecom industry and more specifically Vodafone Idea.
Banks Trying to Reduce Exposure in VIL
As per the ET Telecom report on the matter, DoT held a meeting with the CMDs of banks like the State Bank of India and Bank of Baroda. Most of the exposure to Vodafone Idea, for these companies, is in the form of bank guarantees. While the Department of Telecommunications (DoT) is sitting down with the banks to look at the possible solution, the Finance Ministry on the other hand has ordered the banks to calculate their exposure to Vodafone Idea. As per these calculations, both private and public lenders of Vodafone Idea stare at a massive loss of Rs 1.8 lakh crore if the company collapses. Yes Bank and IDFC First are Vodafone Idea’s top lenders amongst private sector banks. Fearing the possible collapse of the company and the subsequent losses, companies have already started making provisions for the same.
Vodafone Idea Shareholders in Desperation
For instance, IDFC First has made provisions of around 15% of the outstanding exposure. The gross debt payment liable on Vodafone Idea’s head amounts to Rs 1,80,310 crore as of March 31, 2021, excluding lease liabilities. This includes deferred spectrum payment liabilities of Rs 96,270 crore and debt from banks and financial institutions of Rs 23,080 crore. Both the shareholders of VIL, Vodafone Plc, and Aditya Birla Group have shown disinterest in infusing more capital into the company. Besides, Kumar Mangalam Birla in a letter to the cabinet secretary has shown interest in offloading his shares to any interested party.
