The board of Vodafone Idea Ltd (VIL) has approved a proposal to raise Rs 20,000 crore in equity and equity-related instruments as part of a Rs 45,000-crore funding plan. The company’s promoters will also participate in the equity issues.

The loss-making telco will raise Rs 25,000 crore in debt, VIL said in a regulatory filing to the stock exchanges on Tuesday. The capital raise is very crucial for the company which has fallen behind its rivals in 5G rollout, while consistently losing subscribers.

The central government is the single largest shareholder in VIL at present with a holding of 33.1 per cent after it converted the accrued interest towards statutory dues into equity in 2023. Its promoters, which include the Aditya Birla group and Vodafone Plc, jointly hold 50.3 per cent.

VIL said in a statement that it will call a shareholders meeting on April 2, 2024; after shareholder approval, the equity part of the plan will be completed in the coming quarter. ``The promoters will also participate in the proposed equity raise, as committed earlier,’’ the company said.

The telco said it remains actively engaged with its lenders to tie up the debt, which
will follow the equity exercise.

The company’s bank debt stands at less than Rs 4,500 crore. During the quarter ended December 31, 2023, its gross debt stood at Rs 2,14,960 crore — including deferred spectrum payment obligations among others — while the net debt was at Rs 2,14,640 crore.

According to VIL, the funding exercise will enable it to significantly expand
4G coverage, roll out 5G network and engage in other capacity expansion activities.

These investments are expected to improve its competitive positioning and offer an even better customer experience.

VIL said the plan to raise Rs 45,000 crore follows a marked improvement in operating metrics. It has managed to grow its 4G subscriber base and average revenue per user (ARPUs) consecutively for the last 10 quarters.

Further, it remains focused on providing competitive data and voice experience at all locations where it is present.

“The company has consistently shown an improvement in performance even with limited investments. With the proposed fundraising and the positive operational developments, the company is confident of effectively competing in the market,’’ VIL said.

Last week, Aditya Birla Group chairman Kumar Mangalam Birla reiterated its commitment to VIL. He said efforts were on to rope in external investors. ``We remain very committed to Vodafone Idea and as we have said in public domain, efforts are on to get outside investors,’’ he disclosed.

In December 2023, while the telecom subscriber base in India grew marginally to 119 crore on account of new subscriber additions by Reliance Jio and Bharti Airtel, VIL lost 13.68 lakh mobile customers.

During the quarter ended December 31, 2023, VIL saw its net loss narrowing to Rs 6,986 crore compared with Rs 7,990 crore in the year-ago period. The period saw its ARPU improving to Rs 145 from Rs 142 on a sequential basis.

Shares of the telco on Tuesday ended lower by 5.93 per cent at Rs 15.87.

The plan is broadly in line with analysts’ expectation of a Rs 40,000-50,000 crore capital infusion, which could help Vodafone Idea catch up with larger rivals.