(Bloomberg) — Vodafone Group Plc is working on a proposal to boost the capital of its listed Indian arm as the business seeks to float a new sheet after the Indian government lowers its bill for unpaid spectrum fees, people with knowledge of the matter said.
The British telecom company, which owns 19% of Mumbai-listed Vodafone Idea Ltd., is considering transferring part of its stake to the Indian company to keep it on the books, the people said. The share transfer would take place instead of Vodafone putting more cash into its India business, the people said.
The move would strengthen loss-making Vodafone Idea’s balance sheet and ease its current drive to raise debt, the people said, asking not to be identified because the information is private. Vodafone Idea could then sell the shares later, raising additional capital to pay government fees as well as invest in future growth as it seeks to regain market share from rivals such as Reliance Jio Infocomm Ltd.
Vodafone Idea is in talks with lenders for a loan of about 350 billion rupees ($3.7 billion), the people said. CNBC-TV18 reported on the debt talks earlier and said State Bank of India is likely to lead the loan consortium. Most of the debt will be through term loans, the people said.
The Indian government is Vodafone Idea’s largest shareholder at 49%, and billionaire Kumar Mangalam Birla’s Aditya Birla Group also has a minority stake. Shares in Vodafone Idea have climbed roughly 68% over the past 12 months, giving the company a market value of $12.9 billion.
Details of the proposal are still being worked out and the structure of the deal could change, the people said. A Vodafone spokesperson declined to comment, while a Vodafone Idea representative did not immediately respond to queries.
–With help from Amy Thomson.
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