The shareholders of Vodafone Idea Limited (VIL) have approved a proposal to raise Rs 20,000 crore through the issue of securities amid concerns the sum may not be sufficient for the loss-making telco to prune its high debt and make investments in 5G and infrastructure.
The shareholders gave their approval at an EGM on Tuesday, where 99 per cent voted in favour of the resolution.
The board will meet on April 6 to decide on a proposal of issuance of equity shares or convertible securities on a preferential basis.
Besides raising Rs 20,000 crore from equity or equity-related instruments, Vodafone Idea is planning to mobilise Rs 25,000 crore via bank debt, which it has brought down to Rs 4,500 crore from Rs 45,000 crore.
In February, VIL said the promoters would also contribute to the proposed equity raise, as committed earlier.
The promoters, the Aditya Birla group and Vodafone Plc, jointly hold 50.3 per cent.
The central government is now the single largest shareholder with a holding of 33.1 per cent after it converted the accrued interest towards statutory dues into equity in 2023.
Vodafone Idea expects to sew up the debt funding, after the equity issue. During the quarter ended December 31, 2023, its gross debt stood at Rs 2,14,960 crore which included deferred spectrum payment obligations.
A falling subscriber base is a major challenge, which the company expects to take up after raising the funds.
The company has been losing subscribers to its two rivals: in January, VIL lost 15.2 lakh wireless subscribers as its user base dropped to 22.15 crore.
“Vodafone Idea fund raising is ahead, but continued delay in its 5G rollout could trigger further subscriber share consolidation as Reliance Jio and Bharti Airtel continue to rapidly ramp up 5G,’’ analysts at CLSA said in a recent note.
Vodafone Idea is drawing optimism from growing its 4G subscriber base and average revenue per user (ARPUs) for the last 10 quarters.
During the quarter ended December 31, 2023, its ARPU improved to Rs 145 from Rs 142 in the preceding three months.
Vodafone Idea saw its net loss narrowing to Rs 6,986 crore compared with Rs 7,990 crore in the year-ago period for the quarter ended December 31, 2023.
Vodafone Idea said it could raise the funds in one or more tranches, either through a qualified institutional placement (QIP), ADR/GDR, follow-on offering or FCCB (foreign currency convertible bond).
A CNBC Awaaz report said the FPO could be launched in a week or two.
A Moneycontrol report said the company was in talks with investment banks to bring about an efficient fund structure that would optimise various options including rights issue or FPO.
