Vodafone Idea Ltd.'s ₹25,000 crore rights issue-- the largest so far by the company, received a good response from both foreign and public shareholders as the issue was oversubscribed nearly 1.08 times.
Besides a public participation of 1.2 times the offering, the promoters, too, applied for ₹90 crore higher than their aggregate rights entitlement. The promoters, Aditya Birla Group and UK's Vodafone Group, were allotted ₹17,920 crore increasing their shareholding to 71.57% over 71.33% earlier.
"The successful closure of rights issue is a clear indication of the investors’ belief in our post-merger strategy and our ability to leverage the growth opportunities offered by the sector," said Balesh Sharma, chief executive officer of the company. "We are progressing well on integration and are well on track to deliver our synergy targets. Our ongoing investments are improving broadband coverage and capacity, enabling us to offer a superior network experience to our customers as well as enhancing our ability to win new broadband customers," he said.
India's largest telecom firm by subscribers, Vodafone Idea's board of directors, in a May 4 meeting, had approved the rights issue for about 2,000 crore equity shares of ₹10 each at a price of ₹12.50 per share. The paid-up equity capital of the company post the rights offer would stand at ₹28,735 crore shares of face value of ₹10 each. The company looks to list the new shares on the bourses on May 10.
Under rights issue, existing shareholders are offered to purchase additional stock shares, known as subscription warrants, in proportion to their existing holdings. Rights are often transferable, allowing the holder to sell them in the open market.
The telecom operator's rival, Bharti Airtel Ltd. had also announced a ₹25,000 crore rights issue at a price of ₹220 per share, which opened for subscription on May 3 and will close on May 17, according to the company's exchange filings.
Vodafone Idea has been losing a large chunk of its subscriber base to other telecom operators, Bharti Airtel and Reliance Jio. While Vodafone lost 35.87 lakh users taking its total base to 41.52 crore, both Jio and Airtel added to their subscriber base.
Besides loss of subscribers, the company’s losses widened to ₹5,004.6 crore in the December quarter, compared with ₹4,973.8 crore in the preceding quarter. It also needs resources to meet its spectrum liabilities to the government and expand its 4G network coverage from the existing 62%. Its most immediate payment for ₹6,300 crore to the telecom department was due in April.
Vodafone Idea also plans to raise up to ₹5,000 crore by monetizing its 11.5% stake in Indus Towers and has also separately announced plans to sell its fibre network comprising more than 156,000km of intra- and inter-city fibre routes.