The board of Vodafone Idea on Wednesday approved a Rs 25,000-crore rights issue at a sharp discount to the current market price, in an attempt to lure its minority shareholders.

India’s largest telecom player by subscribers is offering its shares at a price of Rs 12.50 each to its shareholders, a discount of almost 61 per cent to the closing price of the Vodafone Idea scrip on Tuesday.

Initially, there was a knee-jerk reaction to the announcement on the bourses, with the Vodafone Idea scrip crashing 7.43 per cent. The counter reversed the losses and settled with gains of 3.13 per cent at Rs 33.

The rights ratio has been fixed at 87 equity shares for every 38 equity shares held by the eligible shareholders of the company on the record date — April 2, 2019. The issue opening date has been fixed for April 10, while the closing date has been set for April 24.

The Telegraph

A company statement said the promoters —Vodafone group and Aditya Birla group — have confirmed their participation of up to Rs 11,000 crore and up to Rs 7,250 crore, respectively, for the issue.

“Furthermore, certain promoter shareholders have also indicated that, in case the rights issue is under-subscribed, they reserve the right to subscribe to part or whole amount of the unsubscribed portion, subject to the applicable laws,” Vodafone Idea said.

Earlier this year, the board of directors of the company had approved a Rs 25,000cr fund-raising plan by way of the rights issue to the existing eligible equity shareholders, following which the company received cabinet approval for a foreign direct investment infusion in February. The rights issue is expected to equip Vodafone Idea with the firepower to take on market competition intensified by late entrant Reliance Jio.

Vodafone holds a 45.1 per cent stake in the combined entity. The Aditya Birla group controls 26 per cent and the public shareholders of Idea own 28.9 per cent.