Vodafone Idea shareholders approve ₹20,000 crore fundraising plans

The shareholders of Vodafone Idea have approved a proposal to issue securities worth about ₹20,000 crore, the debt-laden telecom services provider said in an exchange filing on Wednesday, a day after the company's virtual extraordinary general meeting (EGM).

India's third-largest telecom company would use the much-needed funding to reduce its liabilities, launch 5G services commercially and better compete with the larger rivals by stemming market-share loss.

“The resolution mentioned in the EGM notice stands passed with requisite majority," the Aditya Birla Group-promoted company said. Its shares closed 0.82% higher at ₹13.55 apiece on BSE.

Vodafone Idea’s board had approved a ₹45,000-crore fundraising initiative, including a ₹20,000-crore equity-based capital infusion from existing investors, on February 27. With the approval in place, the telecom company is expected to complete the equity fundraise by the end of June.

Existing promoters will be involved in the equity fundraise, the company had said earlier. It remains unclear whether promoters will include Britain's Vodafone Group Plc as well.

Following the equity fundraise, Vodafone Idea will look to raise debt, taking the total amount of funding to up to ₹45,000 crore. The fundraise is crucial for its ability to begin 5G services. The telecom operator remains the only one without consumer-end 5G services, after both Reliance Jio and Bharti Airtel rolled out 5G services across the country through last year.

The cash-strapped, loss-making mobile phone services provider is the laggard among peers with its biggest challenge being a ₹2.1 trillion debt and falling subscriber base. As per latest data from Trai, the carrier lost 1.5 million users in January this year, up from a 1.4 million subscribers it lost in December 2023. Its total subscriber base stands at 221.5 million as of January, lower than the second-largest telecom firm Airtel that has 382.5 million users, and market leader Reliance Jio that has 464 million users.

As per a Nomura analysis, Vodafone Idea lost market share in 20 out of 22 circles, while its overall market share declined by 20 basis points month-on-month in January to 19.1%, lagging significantly behind its peers. It’s market share has declined by 1.6% in the full FY24 till January.

Over the past year, Vodafone Idea’s average revenue per user increased to ₹145—up 7.5% from ₹135 a year ago. However, the per-user earnings for the telecom operator was significantly lower than Bharti Airtel’s ₹208 and Reliance Jio’s ₹182 as of December last year.