Highlights
- Share transfer proposed instead of cash injection.
- Indian unit in talks for $3.7 billion borrowing.
- Government is biggest shareholder with 49 per cent stake.
The share transfer would replace Vodafone putting cash directly into the Indian business, the people said.
This move would strengthen the finances of loss-making Vodafone Idea and support its current efforts to borrow money, they added.
Vodafone Idea could sell these shares later, giving it extra funds to pay government bills and invest in growth as it tries to win back customers from rivals like Reliance Jio Infocomm.
Vodafone Idea is talking with lenders about borrowing around 350 billion rupees, equal to $3.7 billion, the people said.
CNBC-TV18 reported earlier that State Bank of India will likely lead a group of banks. Most of the money will come through term loans, according to the people.
The Indian government is Vodafone Idea's biggest shareholder with a 49 per cent stake, while billionaire Kumar Mangalam Birla's Aditya Birla Group also owns a smaller portion.
Vodafone Idea's shares have gone up about 68 per cent in the past year, giving the company a market worth of $12.9 billion.
Details of the proposal are still being finalised and the structure could change, the people said.
They did not want to be named because the information is private. A Vodafone spokesperson declined to comment, while a Vodafone Idea representative did not immediately respond to questions.
The planned steps come as Vodafone Idea tries to recover from years of money troubles in India's tough mobile market.
The company has been working to cut its debt and improve its network to better compete with market leaders.
