Thursday, August 26, 2021

Brickwork downgrades Voda Idea's debentures to 'B' over fundraising delay

 The downgrade reflects a substantial decline in the company's subscriber base. It lost 12.40 million subscribers during Q1FY22


Rating agency Brickwork Ratings (BWR) has revised the rating for debentures of Vodafone Idea Ltd ( VIL) from "BB-" to "B" over continuous delay in raising funds impacting its liquidity and considerable deterioration in performance in

Q1FY22.

The company's modification plea filed with the Supreme Court (SC) to allow corrections of computational errors in Adjusted Gross Revenue (AGR) has been rejected by the SC providing no relief to the company.

The outlook on Non-Convertible Debentures (NCDs) remains negative.

The rating agency in a statement said that while VIL has filed a review petition in this regard, the outcome is uncertain. VIL has substantial amounts of debt maturing in FY22 (including the NCDs). Rraising adequate funds in a timely manner is imperative for timely servicing of this debt.

Additionally, the company’s spectrum payments and the first tranche of AGR liabilities will also become due in the coming few months, making the availability of necessary funds all the more critical, it added.

The downgrade reflects a substantial decline in the company’s subscriber base. It lost 12.40 million subscribers during Q1FY22. Moreover, it's Average Revenue Per User (ARPU) further fell to Rs 104 in Q1FY22 from Rs 107 in

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