Struggling India operator Vodafone Idea is better positioned to raise funds following an improved credit rating and the government converting spectrum liabilities into equity, Citi Research suggested in a report.

Local ratings agency ICRA raised the operator’s credit rating for long-term fund facilities to BBB- from BB+.

The Citi report noted the upgrade is a significant boost for Vodafone Idea’s planed INR250 billion ($2.9 billion) fundraising effort, fulfilling a key requirement for lending, The Economist Times reported.

Last month, India’s government announced it would convert INR369.5 billion of the operator’s outstanding spectrum auction liabilities to equity, raising its stake to 49 per cent from 22.6 per cent.

It raised INR19.1 billion in January through a preferential allotment of shares to entities belonging to Vodafone Group.

Vodafone Idea’s latest financial report showed it has a total debt of nearly INR2.6 trillion, including INR1.4 trillion in spectrum levies and INR770 billion in adjusted gross revenue liabilities.

Over the last two years, its mobile user base slipped from 203.5 million to 182.5 million connections at end-March, data from GSMA Intelligence showed.