Vodafone Idea To Raise Rs 20,000 Crore Via Equity With Promoter Participation
The promoters will also participate in the proposed equity raise.
Vodafone Idea Ltd.'s board has approved a fundraise plan of Rs 20,000 crore via equity as the debt-laden telecom operator keeps the hunt on for new investors to fund the rollout of 5G.
The board met on Tuesday to consider the fundraise via a combination of equity and/or equity-linked instruments. The promoters will also participate in the proposed equity raise, according to an exchange filing.
The company will seek the shareholders' nod on April 2 and expects to complete the capital raise in the coming quarter.
The Aditya Birla Group firm plans to raise Rs 45,000 crore through a combination of equity and debt. It remains engaged with its lenders for tying-up the debt funding, which will follow the equity fundraise.
"The equity and debt fund raising will enable the company to make investments towards significant expansion of 4G coverage, 5G network rollout and capacity expansion," a statement said.
U.K.'s Vodafone Group Plc owns 18.1% of Vodafone Idea, while the Aditya Birla Group holds a 32.3% stake. The company has not revealed the quantum of promoter investment in the capital raise.
Debt Woes And 5G Goals
Fresh funds will be used for new capex and the generation received from operations minus the old debt servicing will be used to pay vendors, Chief Executive Officer Akshaya Moondra said in an earnings conference call last month.
Vodafone Idea will prioritise payment of vendor dues, even as it plans to roll out 5G in the next six to seven months, he said. Its competitors, Reliance Jio Infocomm Ltd. and Bharti Airtel Ltd., have already rolled out 5G but the technology is yet to be monetised.
The struggling telecom major has Rs 5,400 crore dues payable by the end of March 2025. Of this, Rs 533 crore is the principal payment for spectrum, while Rs 3,200 crore is debt from banks and financial institutions.
The total gross debt, excluding lease liabilities and including interest accrued, stood at Rs 2.14 lakh crore as of Dec. 31—90% of which is owed to the government.
Funding will be crucial for Vodafone Idea to meet these obligations and for the rollout of 5G.
The stock has declined nearly 3% since the company announced the scheduled board meeting last week.
Last week, Aditya Birla Group Chairperson Kumar Mangalam Birla said there were no plans to exit the struggling telecom business while speaking at the launch of Grasim Industries Ltd.'s new paint business, Birla Opus. The group will continue to look for new investors in Vodafone Idea, he said.
"We are making good progress, but we can't put in a timeline. We remain very committed to Vodafone Idea and like we have said in the public domain, efforts are on to get outside investors," he said.
Vodafone Idea lost 13.68 lakh wireless subscribers in December, as compared with a loss of 10.73 lakh subscribers in November, according to data by the Telecom Regulatory Authority of India released Thursday.
Shares of Vodafone Idea closed 5.93% lower at Rs 15.87 apiece on Wednesday, ahead of the announcement, as compared with a 0.42% gain in the benchmark BSE Sensex.
