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Debt-ridden telecom major Vodafone Idea on Wednesday informed that its board of directors met on 22 June, 2022, to approve a proposal for raising of funds up to 436.21 crore, by way of issuance of equity shares or convertible warrants on a preferential basis.

The VIL Board has approved raising of funds upto 436.21 cr by way of issuance of either:

(a) upto 42,76,56,421 Equity Shares; or

(b) upto 42,76,56,421 Warrants convertible into Equity Shares

"We wish to inform you that the Board of Directors of Vodafone Idea Limited at its meeting held today i.e. 22nd June 2022, has, inter-alia, approved raising of funds aggregating upto 436.21 crore by way of issuance of either: (a) upto 42,76,56,421 Equity Shares of the face value of Rs. 10/- each; or (b) upto 42,76,56,421 Warrants convertible into Equity Shares, to Euro Pacific Securities Ltd. (a Vodafone Group entity and promoter of the Company), on a preferential basis," Vodafone Idea said in a regulatory filing to the stock exchanges.

"Upto 42,76,56,421 Equity Shares of the face value of Rs. 10/- each at an issue price of 10.20 per Equity Share (including premium of Re 0.20 per Equity Share) OR upto 42,76,56,421 Warrants convertible into equivalent number of Equity Shares, at an issue price of Rs. 10.20 per Warrant, aggregating upto Rs. 436.21 crores, in either case," the company statement read.

Vodafone Idea said it will issue the equity stake to the Vodafone Group entity in accordance with Chapter V of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 ('ICDR Regulations').

The relevant date, in terms of provision of ICDR Regulations for determining the floor price of the Preferential Issue, in either case, is June 15, 2022, the company said.

Vodafone Idea is jointly promoted by UK-based Vodafone Group and India's Aditya Birla Group.

The board has also approved convening of an “Extraordinary General Meeting" of the company on 15 July 2022 to seek approval of shareholders for the aforesaid preferential issue, VIL said.

Share price of VIL rose 0.71% to close at 8.53 on the BSE.

Over the last few months, Indian telecom operators have been adding more firepower to their arsenal as the market gears up for rollout of 5G services that will usher in ultra high-speeds and spawn new-age offerings and business models.

The Cabinet, last week, approved the auction of airwaves capable of offering fifth-generation or 5G telecom services and gave its nod for setting up of captive 5G networks by the tech firms.

The auction of over 72 GHz of the spectrum will commence on July 26, 2022.

The Cabinet has approved 5G auctions at reserve prices recommended by the sector regulator Telecom Regulatory Authority of India (TRAI).

TRAI had recommended about a 39 per cent reduction in the reserve or floor price for the sale of 5G spectrum for mobile services.

The 5G services will usher in ultra high speeds, nearly 10 times faster than 4G.

Icra has estimated that telecom industry is likely to shell out around 1-1.1 lakh crore on the 5G auction, despite telcos' reservations over high spectrum prices, and that sector debt level is likely to rise with upcoming auctions.

After experiencing a prolonged bout of financial stress, the telecom service providers - particularly Vodafone Idea - got a shot in the arm with the government, last year, approving a blockbuster relief package that included a four-year break for companies from paying statutory dues, permission to share scarce airwaves, change in the definition of revenue on which levies are paid, and 100 per cent foreign investment through the automatic route.

Following this, debt-ridden Vodafone Idea (VIL) opted for converting about 16,000 crore interest dues liability payable to the government, into equity. This will result in the government holding about 33 per cent stake in the company.

Sources at the Department of Telecommunications (DoT) recently said VIL's equity conversion proposal is in final stages, and required approvals on the same are expected as early as 7-10 days.

In March 2022, Vodafone Idea board had approved raising up to 14,500 crore, including 4,500 crore from promoter entities -- Vodafone and Aditya Birla Group.

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