It looks like Indian operator Vodafone Idea’s plans to pay at least some of its outstanding debts may have run into trouble.

As we reported last month, Vodafone Idea (aka Vi) seemed to have found a way to solve at least one of its debt issues after announcing plans to issue debentures worth 16 billion rupees (about US$195.6 million) to American Tower Corporation (ATC).

However, Vodafone Idea has now said that the planned preferential bonds issue could not be concluded. That’s because a key condition was government conversion of the 161.3 billion rupees (about US$1.96 billion) accrued interest on the operator’s deferred AGR-related dues into equity.

Vodafone Idea says it has not received any communication from the government on such a conversion, so according to an exchange filing, “the issuance of OCDs (optionally convertible debentures) to ATC has not been completed within the validity period of the shareholders’ resolution (i.e. 15 days from the date of passing of the resolution).”

Vodafone Idea is now in discussions with ATC for an extension of the agreement, which may require a new shareholders’ approval.

This follows recent news that the operator had been in talks with State Bank of India (SBI) for a 150-160 billion rupee loan ($1.94 billion), though here too, the need for clarity on the government’s potential shareholding in Vodafone Idea, as well as the operator’s business scale-up plans could be issues.

However, ironically, the government itself also seems to be waiting for a clear fund-raising plan, which puts Vodafone Idea in a very difficult position.

Vodafone Idea needs external funding to clear its over 120 billion rupees (US$1.45 billion) of dues to large vendors such as Indus Towers, ATC, Nokia and Ericsson, besides funding its pending 5G services rollout and bolstering its 4G coverage.

Vodafone Idea still apparently plans to raise Rs 200 billion rupees (US$2.43 billion) via a mix of debt and equity, but without clear signals from the government, that could be difficult.