Vodafone Idea Rises After Board Approves Fundraise To Pay Debt

Shares of Vodafone Idea Ltd. rose nearly 2% on Friday after its board approved raising Rs 2,458 crore by issuing preferential shares to repay vendors' debt.

The telecom giant plans to issue 166 crore shares with a face value of Rs 10 each on a preferential basis, in one or more tranches, to Nokia Solutions Ltd. and Ericsson India Ltd. to pay off part of the outstanding dues. Both of them are Vodafone Idea's long-term network equipment suppliers.

The company will issue 102.7 crore shares to Nokia Solutions at a price of Rs 14.80 per share, aggregating up to Rs 1,520 crore. To Ericsson India, it will allot 63.37 crore shares at the same issue price, which totals to Rs 938 crore, according to an exchange filing.

After this preferential issuance, Nokia Solutions and Ericsson India's stakes in the company will be 1.5% and 0.9%, respectively, the company said in the exchange filing.

With this issuance, Vodafone Idea Ltd. has raised Rs 24,000 crore in equities, including the conversion of 1,440 optionally convertible debentures in March. The telecom company said it is in discussions with its lenders to raise up to Rs 25,000 crore via debt.

The fundraise will enable Vodafone Idea to work strategically to expand its 4G coverage and launch 5G services in the country, the filing said.

Shares of Vodafone Idea Ltd. rose 1.93%, the highest level since June 3, before paring gains to trade 0.44% higher at Rs 16.14 per share as of 10:23 a.m. This compares to 0.23% advance in the NSE Nifty 50.

The stock has gained 104.30% in 12 months, and 1% year-to-date. Total traded volume so far in the day stood at 0.27 times its 30-day average. The relative strength index was at 60.73.

Out of 19 analysts tracking the company, two maintain a 'buy' rating, six recommend a 'hold' and 11 suggest 'sell', according to Bloomberg data. The average 12-month analysts' consensus price target implies a downside of 31.8%.