The Indian Express (Delhi Edition)
Vi to raise ` 18,000 cr via India’s largest ever FPO
VODAFONE IDEA, which has been struggling financially for a long time and trying to raise funds to stay afloat, on Friday said it plans to raise up to `18,000 crore through share sale in India’s biggest follow-on public offer till date.
The company's shares will be issued, under the FPO, in a price band of `10-11 apiece against Friday's closing price of `12.96 on the BSE. The higher end of the price band of `11, is at a discount of 26% compared to recently approved preferential issue price to the promoter entity at `14.87.
The share sale will open on April 18 (for anchor investors on April 16) and close on April 22, Vodafone Idea, which is the country's third-largest telecom service provider, said in a stock exchange filing.
This will be the largest FPO after the `15,000-crore share sale by Yes Bank in 2020.
The fundraising, which comes close on the heels of a `2,075-crore capital infusion by Aditya Birla group via a preferential share issue last weekend, will help the company shore up its position in the domestic telecom market, where peers Reliance Jio and Bharti Airtel are miles ahead of it.
The funds would also help it arrest its subscriber churn owing to is weak 4G coverage, which is not available on a panindia basis. The same will also be used to launch 5G services, and clear government debts related to spectrum.
Vodafone Idea has been losing subscribers month after month, has a gross debt of `2.15 trillion crore, and has been posting quarterly losses in the range of `6,000-8,000, crore.
The fundraise through FPO is part of the company’s plan to raise `20,000 crore through a combination of equity and equity-linked instruments. It plans to raise another `25,0000 crore via debt.
“Today, our main reason for subscriber loss is because we have lack of 4G coverage vis a vis competition and these funding and the investment in capex will enable us to cover and bridge these gaps,” Vodafone Idea CEO Akshaya Moondra had said during the company’s extraordinary general meeting with shareholders earlier this month.
During April-february, Vodafone Idea lost 16.2 million mobile subscribers, taking its total base to 220.5 million, according to data from the Telecom Regulatory Authority of India (Trai).
From the proceeds of the FPO, Vodafone Idea will utilise `5,720 crore for 5G launch, according to the red herring prospectus (RHP) filed by the company. To get started with 5G, the company will first set up 22,000 5G sites — 10,000 sites in the current financial, and 12,000 in FY26 — across 17 priority circles.
Besides 5G, Vodafone Idea will utilise `3,770 crore for purchasing equipment towards setting up 26,000 new 4G sites. The company said, these new 4G sites are proposed to be set up in existing 22 service areas catering to 4G technology, on locations available with passive infrastructure providers, basis long term lease agreements.