Idea board ap­proves ₹3,500 crore QIP

Hindustan Times (Delhi) - - INDIAUNSEEN - Navadha Pandey navadha.p@livemint.com

NEW DELHI: Idea Cel­lu­lar Ltd’s board on Wed­nes­day ap­proved a pro­posal to sell shares to in­sti­tu­tional in­vestors to raise as much as ₹3,500 crore.

“The board has au­tho­rised the com­mit­tee of di­rec­tors to de­cide on the tim­ing, price and ex­act quan­tum of eq­uity shares to be is­sued,” the com­pany said in a fil­ing to stock ex­changes on Wed­nes­day.

On Jan­uary 4, Idea Cel­lu­lar’s board had granted in-prin­ci­ple ap­proval for sale of fur­ther eq­uity of up to ₹3,500 crore and had set up a com­mit­tee to eval­u­ate and rec­om­mend to the board the routes for is­su­ing fur­ther eq­uity.

Sub­se­quently at a meet­ing on Jan­uary 30, share­hold­ers of the com­pany had ap­proved the pro­posal to raise the funds through a qual­i­fied in­sti­tu­tional place­ment. The con­trol­ling share­hold­ers of Idea Cel­lu­lar—birla TMT, Elaine In­vest­ments, Ori­ana In­vest­ments—have re­cently in­vested ₹3,250 crore to strengthen its bal­ance sheet amid in­tense com­pe­ti­tion and be­fore a planned merger with Voda­fone In­dia Ltd.

Fol­low­ing this eq­uity in­fu­sion by Idea’s pro­mot­ers, their stake in In­dia’s third-largest tele­com oper­a­tor will rise to 47.2% from 42.4% now. The pro­posed cap­i­tal rais­ing by Idea, the sale of its stand­alone tow­ers to Amer­i­can Tower Corp. and the po­ten­tial sale of its 11.15% stake in In­dus Tow­ers Ltd will aug­ment the firm’s long-term cap­i­tal re­sources, Idea said in a state­ment on Jan­uary 4.

Com­pa­nies in the debt-laden tele­com sec­tor have been hurt by the en­try of Re­liance Jio In­fo­comm Ltd, which brought tar­iffs to rock-bot­tom and hit the rev­enue streams of other op­er­a­tors.

Idea Cel­lu­lar’s loss for De­cem­ber quar­ter more than tripled to ₹1,285.6 crore as the na­tion’s tele­com reg­u­la­tor halved in­ter­con­nec­tion us­age charges and a tar­iff war sparked by new en­trant Re­liance Jio showed no signs of abat­ing.

The Tele­com Reg­u­la­tory Author­ity of In­dia (Trai) slashed in­ter­con­nect us­age charges— what an oper­a­tor pays an­other to land calls on the lat­ter’s net­work—to 6 paise a minute from 14 paise a minute ef­fec­tive Oc­to­ber 1. Idea’s big­ger ri­val Bharti Air­tel Ltd too was im­pacted from this cut and re­ported a 39% fall in De­cem­ber quar­ter profit to ₹306 crore. In or­der to take on com­pe­ti­tion from Re­liance Jio, Bharti Air­tel is also in the midst of a debt re­duc­tion drive.

On Fe­bru­ary 5, the com­pany an­nounced that Sin­ga­pore Telecom­mu­ni­ca­tions Ltd (Sing­tel) will in­di­rectly raise its stake in Bharti Air­tel by in­vest­ing ₹2,649 crore in Bharti Tele­com Ltd, the pro­moter com­pany of Air­tel, through a pref­er­en­tial al­lot­ment of shares. The funds will be used to re­duce debt. Sing­tel’s to­tal stake (along with its af­fil­i­ates) in Bharti Tele­com will in­crease to 48.9% from 47.17% cur­rently, the state­ment said.

The in­vest­ment comes within two years of Sing­tel’s par­tic­i­pa­tion in Bharti Tele­com’s rights is­sue of ₹2,500 crore, which was com­pleted in Fe­bru­ary 2016.

The Mit­tal fam­ily owned Bharti En­ter­prises con­tin­ues to own more than 50% in Bharti Tele­com. As part of its debt re­duc­tion ex­er­cise, Bharti Air­tel had also in De­cem­ber an­nounced that it, along with an­other group en­tity, will sell a com­bined 20% in its DTH arm, Bharti Tele­me­dia Ltd, to pri­vate eq­uity firm War­burg Pin­cus for $350 mil­lion.

MINT/FILE

Idea Cel­lu­lar’s loss for De­cem­ber quar­ter more than tripled to ₹1,285.6 crore

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