Vodafone Idea is seeking a Rs 35,000 crore 10-year bank loan, with SBI proposing about Rs 7,000 crore exposure as Vi expands its network.
Vodafone Idea (Vi) is preparing to raise a Rs 35,000 crore, 10-year term loan from a consortium of banks as the telecom operator looks to fund network expansion and capital expenditure over the coming decade.
The company is working to assemble a consortium of eight to 10 lenders, with State Bank of India (SBI) approving a proposal to take around 20% of the exposure, or approximately Rs 7,000 crore. The remaining amount is expected to be shared among other public and private sector lenders.
The proposed financing represents an important step for Vi as the company attempts to strengthen its network while managing substantial spectrum-related and other financial obligations.
Vi Plans Rs 35,000 Crore 10-Year Loan
The proposed loan is structured as a 10-year term facility and is expected to be used primarily for Vi’s capital expenditure requirements.
According to people familiar with the discussions cited by Economic Times, SBI’s internal assessment indicated that Vi requires around Rs 35,000 crore in bank loans. However, the operator’s overall requirement to upgrade its services is estimated at around Rs 60,000 crore.
The balance could be funded through internal accruals and potentially further equity infusion, rather than through the proposed bank loan alone.
The long tenure of the proposed financing is particularly significant. It would give Vi a longer window to deploy capital into its network while spreading repayment obligations over an extended period.
SBI Could Take Rs 7,000 Crore Exposure
SBI is emerging as the anchor lender for the proposed financing.
The bank has approved a proposal to take approximately 20% of the Rs 35,000 crore exposure, which works out to around Rs 7,000 crore. Other lenders are expected to participate in the remaining portion, with each creditor reportedly expected to contribute at least Rs 1,500 crore.
The final consortium is expected to include a mix of public and private sector banks.
NaBFID is reportedly likely to become the second-largest lender, with a potential exposure of around Rs 4,000 crore. Punjab National Bank, Canara Bank, Bank of Baroda and Union Bank of India are also in discussions, while ICICI Bank and HDFC Bank are among the private-sector lenders reportedly in touch with Vi.
The contours of the consortium are expected to be finalised by around the middle of October.
Why Banks Are Becoming More Comfortable With Vi
The proposed financing comes at a time when lenders are seeing signs of improvement in Vi’s operating performance.
The company’s underlying consolidated net loss narrowed to Rs 5,358 crore in the June quarter from Rs 6,611 crore a year earlier. More importantly, Vi recorded its first full-quarter of positive net subscriber additions since the Vodafone-Idea merger, with its customer base rising to 193.1 million at the end of June from 192.8 million in the previous quarter.
Vi’s average revenue per user also increased to Rs 195 in the June quarter from Rs 177 a year earlier, representing growth of 10.2%.
These improvements provide lenders with a stronger operating case for financing the company’s network expansion, although Vi continues to face significant long-term financial commitments.
Vi’s Network Expansion Is Driving Capital Needs
Vi has accelerated network investment over the past several quarters.
The company has added around 32,000 4G sites and 16,000 5G sites over the past six quarters, according to the report. Network capacity has increased by around 47%, while 4G population coverage has improved from 77% to 87%.
Vi is targeting 95% population coverage across its operating circles over the next five to six quarters.
Continued network investment is important for Vi because the operator needs to improve coverage and capacity to compete more effectively with Reliance Jio and Bharti Airtel.
The proposed bank financing would therefore give Vi additional financial resources to continue this expansion instead of relying entirely on internal cash generation.
AGR Relief Has Improved Vi’s Funding Prospects
Another major factor behind the improved willingness of lenders to consider Vi’s financing requirements is the government’s decision to reduce the company’s adjusted gross revenue-related burden.
Vi’s AGR payables were reduced by 27% to Rs 64,046 crore in late April, according to Economic Times. The relief has improved the company’s long-term financial outlook and reduced some of the pressure surrounding its government-related liabilities.
The government is also Vi’s largest shareholder after converting certain dues into equity.
This government ownership has reportedly provided additional confidence to public-sector lenders evaluating long-term financing for the telecom operator.
Banks Still Have Concerns About Vi’s Repayment Capacity
Despite the improving operational picture, the proposed Rs 35,000 crore loan is not without risks.
Vi still has around Rs 49,000 crore in spectrum-related obligations, and lenders are assessing whether the company’s future cash flows will be sufficient to simultaneously finance network expansion, service debt and meet its spectrum payment commitments.
Vi generated Rs 19,411 crore in operating cash flow during FY26. However, HSBC Global Investment Research has estimated that operating cash flows could fall short of spectrum payment obligations in FY29, even after assuming a tariff increase in the first quarter of calendar 2027.
This makes the structure and conditions of the proposed long-term loan particularly important.
SBI Sets Conditions for the Proposed Financing
The proposed SBI financing also comes with conditions intended to protect lenders.
One reported condition requires Vi to manage any shortfall in investment requirements above the bank loan amount during the loan period. SBI is also expected to have oversight of Vi’s cash flows, with funds routed through accounts under its monitoring.
Another reported condition concerns Aditya Birla Group’s stake in Vi.
The group would be required to maintain its equity position after converting its warrants and rights, while a group company is also expected to provide a comfort guarantee as part of the financing conditions.
Kumar Mangalam Birla’s continued position as Vi chairman is reportedly another condition attached to the long-term financing.
Vi Has Already Secured Other Funding
The proposed Rs 35,000 crore loan would add to funding that Vi has already lined up.
Aditya Birla Group has committed Rs 4,730 crore through warrants, of which Rs 1,183 crore had been infused as of the latest report. Vi had also secured around Rs 6,400 crore in debt funding by August and placed capital expenditure orders worth Rs 59,000 crore for network expansion.
The new bank loan would therefore form part of a much broader financing strategy rather than being Vi’s only source of capital.
What the Rs 35,000 Crore Loan Means for Vi
If the consortium is successfully completed, the long-term loan could provide Vi with greater visibility over its network investment plans.
The operator needs substantial capital to expand 4G and 5G coverage, improve network capacity and compete for higher-value customers in India’s increasingly data-intensive telecom market.
At the same time, the size and 10-year tenure of the proposed facility underline the scale of the financial challenge facing Vi.
The key question will be whether the company’s improving subscriber trends, higher ARPU and expanding network can translate into enough additional cash generation to support both future investment and its existing financial obligations.
For now, the proposed Rs 35,000 crore facility is a significant sign that lenders are becoming more willing to back Vi’s turnaround, but the final consortium and loan terms will determine how much funding the operator ultimately secures.
