The telco said it would sell 16,000 optionally convertible, unsecured, unrated and unlisted debentures of ₹10 lakh each in one or more tranches.
The bonds will carry a coupon rate of 11.2% per annum, payable semi-annually during its term of 18 months, and will be convertible into shares at a price of ₹10 per share.
“The funds raised will be used to pay amounts owed to ATC under the master lease agreements and for general corporate purposes," Vodafone Idea said.
It also added that the preferential sale of debentures would be subject to certain conditions, including shareholder approval and the government converting interest from deferment of adjusted gross revenue and spectrum dues owed by the company into equity.
Vodafone Idea owes up to ₹3,000 crore to ATC and an additional estimated ₹7,000 crore to Indus Towers, the world’s largest tower provider, according to people familiar with the development.
Vodafone Idea sought softer payment terms, including additional time and partial payment of its outstanding dues, from Indus Towers, following reports of the tower provider considering revocation of services if its dues were not paid.
Industry executives said that the move to pay ATC would provide the loss-making telecom service provider, which has a debt of more than ₹1.9 trillion, some breathing space as it struggles to raise ₹20,000 crore either through equity or debt from external investors.
Vodafone Idea, which serves more than 260 million mobile phone subscribers, requires funding to remain competitive in the Indian market, where competitors such as Bharti Airtel and Reliance Jio have laid out aggressive plans for launching 5G services.
The top two telecom companies have already signed up vendors for telecom gear to be used for deploying 5G networks, but Vodafone Idea is yet to finalize the contracts.
Vodafone Idea’s chief executive officer Akshaya Moondra said at the company’s 27th annual general meeting last month that it was in discussions with various vendors for 5G (gear) procurements and also with banks for funding arrangements.
He had said that once these two things are in place, it will take action for the deployment of 5G.
