Vodafone mulls unique funding plan to finance India operations, says report

Vodafone Plc is looking to raise $1.5 billion in a three-year loan facility from global banks to finance its India operations through a unique structure, The Economic Times reported citing sources.

Vodafone's fund raising plan will see the company pledge cash flows from the local business and banks aren’t too keen because they will have no recourse to the parent’s balance sheet or its equity shares in case of a default, said the report citing four independent sources aware of the matter.

Vodafone's India investments include a 45.2 percent stake in Vodafone Idea and 42 percent of Indus Towers.

The UK telecoms firm has proposed an offshore orphan special purpose vehicle (SPV), which will enter into a total return swap agreement with Vodafone Plc in lieu of its economic interest in Vodafone Idea and Indus as the underlying security for the facility, as per the report.

Last week, Vodafone and Aditya Birla Group said they will infuse over Rs 18,000 crore into India's largest telecom operator Vodafone Idea Ltd through a rights issue to arm the company with firepower to take on market competition intensified by Reliance Jio.