Business

Vodafone Idea is now ‘Vi’, Convertible Bond Sale Soon

Vodafone_Idea_is_now_Vi_Convertible_Bond_Sale_Soon

Vodafone Idea Ltd on Monday rebranded itself as ‘Vi’, creating a unified identity two years after the merger of erstwhile Vodafone India Ltd and Idea Cellular Ltd. The company termed the rebranding as the final step towards integrating the two brands, which have had vastly different appeals among customer segments.

“The integration of the two brands is a culmination of the largest telecom integration in the world," said Ravindar Takkar, chief executive, Vodafone Idea. “It’s time for a fresh start."

“Your company is also embarking on a new brand identity to mark the culmination of the integration exercise bringing to customers the best of both brands," chairman Kumar Mangalam Birla wrote to shareholders in the company’s annual report.

The rebranding comes at a time the company looks to raise up to ?25,000 crores to meet government dues, pay interest, and invest in operations. Vodafone Idea will initially raise hybrid debt through convertible bonds, two people aware of the matter said.

“Vodafone Idea’s convertible bonds will offer an annual return of at least 10% like a conventional bond. The company’s proposed hybrid bonds will have tenures of around 10 years. The issuance will happen within the next 3-4 months," one of the two people said.

“The chances of an equity investor will improve once the firm is able to improve its Ebitda, which at the current level is not enough to even service the finance costs on its total debt which exceeds ?1.2 trillion," said the second person.

Sudip Bandyopadhyay, group chairman, Inditrade Capital Ltd. said," The convertible bond is the optimum structure for fundraising in VIL at this juncture when the risks are significant. It’s akin to a startup with risks and uncertainties around its eventual survival. Post the first round of convertible bond raise, the business can focus on operational efficiencies and raising of average revenue per user ...then the next round of funds can come through equity."

“All options are open with potential investors," said Takkar. “We definitely want the average revenue per user (Arpu) to improve to ?200 initially and then to ?300 eventually."

The bonds will earn the potential Vodafone Idea investors a fixed interest income every year and a return of the principal amount along with a premium on the date of maturity," said the first person.

Once ARPU and cash flows improve after revised tariffs, the borrowings will be gradually paid off, said the first person.


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