Vodafone Idea board gives nod to ₹2,458-crore fundraising

The company said it will issue shares worth 1,520 crore and 938 crore to Nokia and Ericsson, respectively, at 14.8 apiece, or at a 35% premium of 4.8 per share to its follow-on public offer.

Vaamanaa Sethi, Gulveen Aulakh
First Published13 Jun 2024, 05:45 PM IST
Vodafone Idea board gives nod to raise  <span class='webrupee'>₹</span>2,458 crore on a preferential basis.
Vodafone Idea board gives nod to raise ₹2,458 crore on a preferential basis.

The Vodafone Idea Ltd board has approved issuance of about 1.66 billion shares worth 2,458 crore on a preferential basis to partially settle outstanding dues to its equipment suppliers Nokia Solutions and Networks India, and Ericsson India, the Aditya Birla Group-promoted company said on Thursday. 

In a statement to the BSE, the company said it will issue shares worth 1,520 crore and 938 crore to Nokia and Ericsson, respectively, at 14.8 apiece, or at a 35% premium of 4.8 per share to its follow-on public offer. 

"It (the move) further bolsters VIL’s capex rollout for building a top quality 4G and 5G network to contribute towards India’s digital transformation," it added.

In May, India's third largest telco by subscriber count had raised 18,000 crore though a follow-on public offer. It has a six-month lock-in period. 

“VIL is all set to participate in the industry growth with right investments to expand its 4G coverage and offer 5G experience to its customers while remaining focused on its execution capabilities," said Akshaya Moondra, chief executive, Vodafone Idea. 

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"As VIL embarks on its growth journey, support from key stakeholders is critical and the agreement with Nokia and Ericsson reaffirms these vendors as long-term partners of the company, and sets the stage for the next phase of our growth,” he added.

The board also approved convening of an extraordinary general meeting of the company on 10 July, inter-alia, to get shareholder approval for the above matters, VIL added.

Following this preferential issuance, Nokia and Ericsson will hold 1.5% and 0.9% in the company, respectively, while promoter shareholding will stand at 37.3%, with the government having a 23.2% stake. The remaining 37.1% is held by the public.

Following this move, VIL has raised 24,000 crore of equity, including conversion of 1,440 optionally convertible debentures in March by ATC India, India’s largest FPO issue of 18,000 crore in April, and and a preferential issue to promoters in May. 

“Additionally, in line with its stated fund-raising roadmap, the company is in discussions with lenders to raise debt funding to the tune of 25,000 crore,” the company added.

Vodafone Idea’s outstanding dues to vendors, including Indus Towers, Nokia and Ericsson, amount to 13,500 crore, according to industry estimates. Of this, a majority of its dues, amounting to 10,000 crore, is owed to Indus Towers.

Vodafone Idea’s net debt stood at over 2.14 trillion, including 1.9 trillion it owes to the government in deferred spectrum payments, and share of adjusted gross revenue. 

Part of the debt is also owed to banks, including State Bank of India. However, the telco has managed to reduce its bank debt significantly over the last financial year, down to 4,500 crore as of March 2024.

Sunil Mittal, chairman of Bharti Airtel, which is a 48% shareholder in Indus Towers, said recently that Vodafone Idea should pay its past dues to Indus, failing which services could be stopped. 

Vodafone Idea reported a loss of 7,675 crore in the March quarter due to higher interest and financing costs. For the fiscal year ended 31 March 2024, its losses had widened to 31,238.4 crore from 29,301.1 crore in the previous fiscal year.

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News in Numbers

Numbers that help you understand news better
$5 M

394,000

$112 B

12.1%

₹133.50 Cr

₹12,300 Cr

$136 M

First Published:13 Jun 2024, 05:45 PM IST
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