A collapse of Vodafone Idea will hurt IDFC First Bank, YES Bank most

MUMBAI: The looming prospect of a financial crisis in India’s third-largest telecom operator, Vodafone Idea, will spell disaster for some of the country’s biggest private sector banks just when they were recovering from a multi-year bad loan cycle.

The refusal by existing promoters of Vodafone Idea to infuse cash in the debt-laden company and the Supreme Court’s recent dismissal of a plea for rectification of alleged miscalculation in adjusted gross revenue dues payable by the company to the government have condemned the telecom operator to bankruptcy, unless it can raise fresh capital.

Prospects of fund raising for the company look grim given that any new strategic investor will have to pour in billions of dollars that will largely be channelled to the government coffers and will not be reinvested in the company to prepare it for the new 5G world.