Vodafone Idea decides to raise ₹25,000 crore The board approved fundraising through two methods—by issue of equity shares and non-convertible debentures
NEW DELHI/MUMBAI: Vodafone Idea Ltd on Friday said it will raise as much as ₹25,000 crore as the company seeks to pay off dues and restore its financial health after last year’s adverse Supreme Court (SC) order threatened its survival.
The company’s board has approved the fundraising just days after the top court allowed telcos, including Vodafone Idea, 10 years to settle about ₹1.4 lakh crore in dues to the telecom department. Out of this, Voda Idea owes the government more than ₹58,000 crore.
The fundraising will be through the sale of shares or non-convertible debentures, the company said in an exchange filing. Both routes have a limit of ₹15,000 crore each.
Analysts said Vodafone Idea needs fresh equity, higher tariffs and concession in government levies to continue operations, besides paying the annual instalment of the adjusted gross revenue-related dues that include spectrum usage charges, license fee, interest, penalty and interest on the penalty.
“While the amount may seem lower than expectations, the fundraising process is likely to be gradual. This amount approved by the board does not seem to limit any private equity player from seeking a Vodafone Idea stake in the future,” a senior telecom analyst said, requesting anonymity.
Mint reported on September 3, citing two people aware of the negotiations, that Amazon.com Inc. and Verizon Communications are set to resume talks to buy a significant stake in debtridden Vodafone Idea. The talks were paused because the court was then considering whether to allow telcos to pay dues in a staggered fashion. On Tuesday, the SC granted telcos 10 years for payment of AGR dues. The court ordered an upfront payment of 10% on the total dues by March 31. The remaining have to be paid in 10 equal instalments at an interest rate of 8%.
Vodafone Idea needs at least ₹70,000 crore, which is three times its market capitalisation, to reach a manageable liquidity position, said analysts at Deutsche Bank Research. “After that, however, it would appear to offer value over its peers. We doubt that investors have such appetite and that a partial recapitalisation is more likely,” the analysts said.
The apex court’s verdict, however, favours rival Bharti Airtel Ltd, which has fully provided for the AGR dues estimated at ₹43,980 crore.