Promoters to join Vodafone Idea’s ₹45K cr fundraise
The board of Vodafone Idea Ltd on Tuesday approved plans to raise ₹45,000 crore in equity and debt, including capital from its promoters.
The cash-strapped telco said it will meet shareholders on 2 April to seek permission to raise ₹20,000 crore in equity, and complete the process by the end of the June quarter. Following this, the company will look to raise debt, taking the total amount of funding to ₹45,000 crore.
Vodafone Idea remains India’s only private telco without consumer-end 5G services, after both Reliance Jio and Bharti Airtel rolled out high-speed services across the country last year. Kumar Mangalam Birla, chairman of Aditya Birla Group and one of the main promoters of Vodafone Idea, said at the 2023 Mobile World Congress that the telco will look to introduce 5G services this year. The telco reaffirmed the statement on Tuesday, stating the amount will be used “towards significant expansion of 4G coverage, 5G network rollout and capacity expansion.”
Vodafone Idea’s biggest challenge is its shrinking customer base. It had 223 million users at the end of December, down 7.5% from 241.3 million a year earlier. In December alone, it lost 1.37 million net subscribers. In the same month, Reliance Jio and Bharti Airtel added 3.99 million and 1.85 million users in December. The two rivals for Vodafone-Idea presently have 459.8 million and 381.7 million subscribers, respectively.
Vodafone Idea said the fundraising “follows a marked improvement in operating metrics.”
“The company has managed to grow its 4G subscriber base and average revenues per user (Arpus) consecutively for the last 10 quarters. It remains focused on providing competitive data and voice experience at all locations
Vodafone Idea remains India’s only private telco without 5G services.
where it is present… and is also steadfast in building a differentiated digital experience adding several digital offerings in the recent quarters. It has consistently shown an improvement in performance even with limited investments. With the proposed fund raise and the positive operational developments, the company is confident of effectively competing in the market,” Vodafone-Idea’s media statement read.
A senior analyst at a Mumbai-based broker said higher user revenue and a still-sizeable premium subscriber base in tier-I cities bode well for Vodafone-Idea.
“The telco is unlikely to be able to compete with Reliance Jio in terms of the latter’s volumedriven market play in tier-II cities and beyond. Vodafone Idea also has the lowest valuation among the three top telcos, all of which combine to make the operator an interesting option for investors. With rising Arpus, a cash infusion can help the operator revive its present quantum of losses—but this is likely to at least take two years to navigate. Sizeable infrastructure investments will also play a role here,” the analyst said.
Over the past year, Vodafone-Idea’s Arpu increased to ₹145—up 7.5% from ₹135 a year ago.
The telco had 223 million users at the end of December, down 7.5% from 241.3 million a year earlier