The board of Vodafone Idea Ltd (VIL) on Monday approved a proposal to issue up to 175.53 crore shares on a preferential basis to Vodafone Group entities for ₹1,980 crore at ₹11.28 apiece.

The VIL share on Monday closed 0.12 per cent lower at ₹8.10 on the BSE. At close it had a market cap of ₹56,456.85 crore.

The preferential allotment comes days after Vodafone Group sold its residual 3 per cent stake in Indus Towers for ₹2,802 crore.

The British firm had said proceeds from the sale would be used to clear its debt of $101 million, or about ₹856 crore, to its lenders.
The remaining amount will be utilised to subscribe to an issue of new equity shares by VIL, and proceeds from this capital raise would be used by VIL to pay the outstanding master services agreement dues to Indus.

For Vodafone, the latest support to the Indian joint venture comes after it had said in 2023 that the group’s carrying value in VIL is zero.

In 2019, Vodafone plc had written off the book value of ₹17,000 crore investment in VIL. However, in 2022 the company had announced that it would invest up to ₹3,375 crore into VIL.

"The Board of directors of Vodafone Idea Limited at its meeting held today December 9, 2024, has approved.... issuance of up to 1,755,319,148 equity shares of face value of ₹10 each at an issue price of ₹11.28 per equity share (including a premium of ₹1.28 per equity share) for an aggregate consideration of up to ₹1,980 crore,’’ the telco said in a regulatory filing.

VIL added that these shares will be issued to Omega Telecom Holdings Private Limited (up to ₹1,280 crore) and Usha Martin Telematics Limited (up to ₹700 crore) which are Vodafone Group entities and classified promoters of the company.

Post issue, the stake of Omega Telecom will rise to 1.98 per cent from 0.40 per cent while it will increase to 1 per cent from 0.13 per cent for Usha Martin Telematics.

It added that an extraordinary general meeting (EGM) would be held on January 7, 2025, to approve the proposal.

The Vodafone Group currently has 22.56 per cent stake in VIL, while the Adity Birla group holds 14.76 per cent. On the other hand, the Government of India has 23.15 per cent shareholding.

Vodafone Idea reported a narrowing of its consolidated loss to ₹7,175.9 crore in the September quarter, mainly on account of an increase in average revenue per user (ARPU) post-tariff hike in July. The company had posted a loss of ₹8,746.6 crore a year ago.